Correlation Between Ftfa Franklin and Northern Funds
Can any of the company-specific risk be diversified away by investing in both Ftfa Franklin and Northern 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 Ftfa Franklin and Northern Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ftfa Franklin Templeton Growth and Northern Funds , you can compare the effects of market volatilities on Ftfa Franklin and Northern 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 Ftfa Franklin with a short position of Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ftfa Franklin and Northern Funds.
Diversification Opportunities for Ftfa Franklin and Northern Funds
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ftfa and Northern is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ftfa Franklin Templeton Growth and Northern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Funds and Ftfa Franklin 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 Ftfa Franklin Templeton Growth are associated (or correlated) with Northern Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Funds has no effect on the direction of Ftfa Franklin i.e., Ftfa Franklin and Northern Funds go up and down completely randomly.
Pair Corralation between Ftfa Franklin and Northern Funds
Assuming the 90 days horizon Ftfa Franklin Templeton Growth is expected to generate 0.61 times more return on investment than Northern Funds. However, Ftfa Franklin Templeton Growth is 1.65 times less risky than Northern Funds. It trades about 0.09 of its potential returns per unit of risk. Northern Funds is currently generating about 0.02 per unit of risk. If you would invest 1,594 in Ftfa Franklin Templeton Growth on September 4, 2024 and sell it today you would earn a total of 532.00 from holding Ftfa Franklin Templeton Growth or generate 33.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ftfa Franklin Templeton Growth vs. Northern Funds
Performance |
| Timeline |
| Ftfa Franklin Templeton |
| Northern Funds |
Ftfa Franklin and Northern Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ftfa Franklin and Northern Funds
The main advantage of trading using opposite Ftfa Franklin and Northern Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ftfa Franklin position performs unexpectedly, Northern 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 Northern Funds will offset losses from the drop in Northern Funds' long position.| Ftfa Franklin vs. Franklin Mutual Beacon | Ftfa Franklin vs. Templeton Developing Markets | Ftfa Franklin vs. Franklin Mutual Global | Ftfa Franklin vs. Franklin Mutual Global |
| Northern Funds vs. Siit Global Managed | Northern Funds vs. Dreyfusstandish Global Fixed | Northern Funds vs. Legg Mason Global | Northern Funds vs. Dreyfusstandish Global Fixed |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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