Correlation Between American Funds and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both American Funds and Franklin Strategic 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 American Funds and Franklin Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Franklin Strategic Series, you can compare the effects of market volatilities on American Funds and Franklin Strategic 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 American Funds with a short position of Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Franklin Strategic.
Diversification Opportunities for American Funds and Franklin Strategic
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Franklin Strategic Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Series and American Funds 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 American Funds The are associated (or correlated) with Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Series has no effect on the direction of American Funds i.e., American Funds and Franklin Strategic go up and down completely randomly.
Pair Corralation between American Funds and Franklin Strategic
Assuming the 90 days horizon American Funds The is expected to generate 1.01 times more return on investment than Franklin Strategic. However, American Funds is 1.01 times more volatile than Franklin Strategic Series. It trades about 0.28 of its potential returns per unit of risk. Franklin Strategic Series is currently generating about 0.15 per unit of risk. If you would invest 2,568 in American Funds The on September 4, 2024 and sell it today you would earn a total of 61.00 from holding American Funds The or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds The vs. Franklin Strategic Series
Performance |
| Timeline |
| American Funds |
| Franklin Strategic Series |
American Funds and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Franklin Strategic
The main advantage of trading using opposite American Funds and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.| American Funds vs. Lord Abbett Government | American Funds vs. Ab Government Exchange | American Funds vs. Short Term Government Fund | American Funds vs. Dunham Porategovernment Bond |
| Franklin Strategic vs. Franklin Mutual Beacon | Franklin Strategic vs. Templeton Developing Markets | Franklin Strategic vs. Franklin Mutual Global | Franklin Strategic vs. Franklin Mutual Global |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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