Correlation Between Franklin High and Eagle Mid
Can any of the company-specific risk be diversified away by investing in both Franklin High and Eagle Mid 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 Eagle Mid 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 Eagle Mid Cap, you can compare the effects of market volatilities on Franklin High and Eagle Mid 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 Eagle Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Eagle Mid.
Diversification Opportunities for Franklin High and Eagle Mid
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Eagle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Eagle Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mid Cap 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 Eagle Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mid Cap has no effect on the direction of Franklin High i.e., Franklin High and Eagle Mid go up and down completely randomly.
Pair Corralation between Franklin High and Eagle Mid
Assuming the 90 days horizon Franklin High Income is expected to under-perform the Eagle Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin High Income is 4.56 times less risky than Eagle Mid. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Eagle Mid Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,227 in Eagle Mid Cap on August 28, 2024 and sell it today you would earn a total of 1,067 from holding Eagle Mid Cap or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Eagle Mid Cap
Performance |
| Timeline |
| Franklin High Income |
| Eagle Mid Cap |
Franklin High and Eagle Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Eagle Mid
The main advantage of trading using opposite Franklin High and Eagle Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Eagle Mid 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 Eagle Mid will offset losses from the drop in Eagle Mid's long position.| Franklin High vs. Conservative Balanced Allocation | Franklin High vs. Calvert Conservative Allocation | Franklin High vs. Delaware Limited Term Diversified | Franklin High vs. Adams Diversified Equity |
| Eagle Mid vs. Aqr Large Cap | Eagle Mid vs. Touchstone Large Cap | Eagle Mid vs. Rational Strategic Allocation | Eagle Mid vs. Goldman Sachs Large |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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