Correlation Between Franklin Dynatech and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Dynatech and American Funds 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 Dynatech and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Dynatech Fund and American Funds Inflation, you can compare the effects of market volatilities on Franklin Dynatech and American Funds 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 Dynatech with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and American Funds.
Diversification Opportunities for Franklin Dynatech and American Funds
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and American is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and American Funds go up and down completely randomly.
Pair Corralation between Franklin Dynatech and American Funds
Assuming the 90 days horizon Franklin Dynatech Fund is expected to generate 3.56 times more return on investment than American Funds. However, Franklin Dynatech is 3.56 times more volatile than American Funds Inflation. It trades about 0.1 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.06 per unit of risk. If you would invest 11,427 in Franklin Dynatech Fund on September 12, 2024 and sell it today you would earn a total of 5,652 from holding Franklin Dynatech Fund or generate 49.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Dynatech Fund vs. American Funds Inflation
Performance |
| Timeline |
| Franklin Dynatech |
| American Funds Inflation |
Franklin Dynatech and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Dynatech and American Funds
The main advantage of trading using opposite Franklin Dynatech and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Dynatech position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Franklin Dynatech vs. Strategic Allocation Moderate | Franklin Dynatech vs. Qs Moderate Growth | Franklin Dynatech vs. Transamerica Cleartrack Retirement | Franklin Dynatech vs. College Retirement Equities |
| American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. Vanguard Inflation Protected Securities | American Funds vs. American Funds Inflation |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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