Correlation Between Franklin High and Capital World
Can any of the company-specific risk be diversified away by investing in both Franklin High and Capital World 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 Capital World 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 Capital World Bond, you can compare the effects of market volatilities on Franklin High and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Capital World.
Diversification Opportunities for Franklin High and Capital World
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Capital is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Franklin High i.e., Franklin High and Capital World go up and down completely randomly.
Pair Corralation between Franklin High and Capital World
Assuming the 90 days horizon Franklin High Income is expected to generate 0.84 times more return on investment than Capital World. However, Franklin High Income is 1.19 times less risky than Capital World. It trades about 0.12 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.03 per unit of risk. If you would invest 150.00 in Franklin High Income on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Franklin High Income or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Capital World Bond
Performance |
| Timeline |
| Franklin High Income |
| Capital World Bond |
Franklin High and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Capital World
The main advantage of trading using opposite Franklin High and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Capital World vs. Us Government Plus | Capital World vs. Us Government Securities | Capital World vs. Goldman Sachs Government | Capital World vs. Dreyfus Government Cash |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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