Correlation Between Franklin High and American Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin High and American Mutual 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 Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and American Mutual Fund, you can compare the effects of market volatilities on Franklin High and American Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and American Mutual.
Diversification Opportunities for Franklin High and American Mutual
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 Yield are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Franklin High i.e., Franklin High and American Mutual go up and down completely randomly.
Pair Corralation between Franklin High and American Mutual
Assuming the 90 days horizon Franklin High Yield is expected to generate 0.31 times more return on investment than American Mutual. However, Franklin High Yield is 3.21 times less risky than American Mutual. It trades about 0.43 of its potential returns per unit of risk. American Mutual Fund is currently generating about -0.13 per unit of risk. If you would invest 919.00 in Franklin High Yield on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Franklin High Yield or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. American Mutual Fund
Performance |
| Timeline |
| Franklin High Yield |
| American Mutual |
Franklin High and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and American Mutual
The main advantage of trading using opposite Franklin High and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, American Mutual 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 Mutual will offset losses from the drop in American Mutual's long position.| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. SCOR PK | Franklin High vs. Morningstar Unconstrained Allocation |
| American Mutual vs. Multisector Bond Sma | American Mutual vs. Versatile Bond Portfolio | American Mutual vs. T Rowe Price | American Mutual vs. Franklin High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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