Correlation Between Franklin High and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin High 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 High 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 High Income and American Funds Inflation, you can compare the effects of market volatilities on Franklin High 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 High with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and American Funds.
Diversification Opportunities for Franklin High and American Funds
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and American is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income 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 High 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 High Income 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 High i.e., Franklin High and American Funds go up and down completely randomly.
Pair Corralation between Franklin High and American Funds
Assuming the 90 days horizon Franklin High Income is expected to generate 0.98 times more return on investment than American Funds. However, Franklin High Income is 1.03 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.05 per unit of risk. If you would invest 160.00 in Franklin High Income on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Franklin High Income or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. American Funds Inflation
Performance |
| Timeline |
| Franklin High Income |
| American Funds Inflation |
Franklin High and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and American Funds
The main advantage of trading using opposite Franklin High and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High 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 High vs. SCOR PK | Franklin High vs. Morningstar Unconstrained Allocation | Franklin High vs. Via Renewables | Franklin High vs. Bondbloxx ETF Trust |
| American Funds vs. Franklin High Income | American Funds vs. Ab Global Risk | American Funds vs. Alliancebernstein Global High | American Funds vs. Fa 529 Aggressive |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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