Correlation Between Franklin Convertible and Franklin Mutual

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Franklin Mutual at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin Convertible and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Convertible and Franklin Mutual and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin Convertible with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Franklin Mutual.

Diversification Opportunities for Franklin Convertible and Franklin Mutual

FranklinFranklinDiversified AwayFranklinFranklinDiversified Away100%
0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Franklin and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon and Franklin Convertible is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin Vertible Securities are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Franklin Mutual go up and down completely randomly.

Pair Corralation between Franklin Convertible and Franklin Mutual

Assuming the 90 days horizon Franklin Vertible Securities is expected to generate 0.75 times more return on investment than Franklin Mutual. However, Franklin Vertible Securities is 1.34 times less risky than Franklin Mutual. It trades about 0.11 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.03 per unit of risk. If you would invest  2,127  in Franklin Vertible Securities on November 21, 2024 and sell it today you would earn a total of  305.00  from holding Franklin Vertible Securities or generate 14.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Franklin Vertible Securities  vs.  Franklin Mutual Beacon

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-8-6-4-202
JavaScript chart by amCharts 3.21.15FCSKX TEBIX
       Timeline  
Franklin Convertible 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Franklin Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Franklin Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.52424.525
Franklin Mutual Beacon 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Franklin Mutual Beacon has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.51616.517

Franklin Convertible and Franklin Mutual Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.87-1.39-0.91-0.430.00.440.921.41.882.36 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15FCSKX TEBIX
       Returns  

Pair Trading with Franklin Convertible and Franklin Mutual

The main advantage of trading using opposite Franklin Convertible and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Franklin Mutual can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.
The idea behind Franklin Vertible Securities and Franklin Mutual Beacon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios