Correlation Between Franklin High and Sound Mind
Can any of the company-specific risk be diversified away by investing in both Franklin High and Sound Mind 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 Sound Mind 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 Sound Mind Investing, you can compare the effects of market volatilities on Franklin High and Sound Mind 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 Sound Mind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Sound Mind.
Diversification Opportunities for Franklin High and Sound Mind
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Sound is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Sound Mind Investing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Mind Investing 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 Sound Mind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Mind Investing has no effect on the direction of Franklin High i.e., Franklin High and Sound Mind go up and down completely randomly.
Pair Corralation between Franklin High and Sound Mind
Assuming the 90 days horizon Franklin High is expected to generate 307.0 times less return on investment than Sound Mind. But when comparing it to its historical volatility, Franklin High Income is 3.77 times less risky than Sound Mind. It trades about 0.0 of its potential returns per unit of risk. Sound Mind Investing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Sound Mind Investing on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Sound Mind Investing or generate 2.59% 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. Sound Mind Investing
Performance |
| Timeline |
| Franklin High Income |
| Sound Mind Investing |
Franklin High and Sound Mind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Sound Mind
The main advantage of trading using opposite Franklin High and Sound Mind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Sound Mind 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 Sound Mind will offset losses from the drop in Sound Mind'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 |
| Sound Mind vs. Morningstar Aggressive Growth | Sound Mind vs. Franklin High Income | Sound Mind vs. Needham Aggressive Growth | Sound Mind vs. Artisan High Income |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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