Correlation Between Franklin Adjustable and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable 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 Adjustable 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 Adjustable Government and American Funds 2010, you can compare the effects of market volatilities on Franklin Adjustable 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 Adjustable with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and American Funds.
Diversification Opportunities for Franklin Adjustable and American Funds
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 and Franklin Adjustable 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 Adjustable Government 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 2010 has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and American Funds go up and down completely randomly.
Pair Corralation between Franklin Adjustable and American Funds
Assuming the 90 days horizon Franklin Adjustable is expected to generate 1.88 times less return on investment than American Funds. But when comparing it to its historical volatility, Franklin Adjustable Government is 3.02 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds 2010 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,054 in American Funds 2010 on September 13, 2024 and sell it today you would earn a total of 175.00 from holding American Funds 2010 or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. American Funds 2010
Performance |
| Timeline |
| Franklin Adjustable |
| American Funds 2010 |
Franklin Adjustable and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and American Funds
The main advantage of trading using opposite Franklin Adjustable and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable 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 Adjustable vs. Franklin Mutual Beacon | Franklin Adjustable vs. Templeton Developing Markets | Franklin Adjustable vs. Franklin Mutual Global | Franklin Adjustable vs. Franklin Mutual Global |
| American Funds vs. Franklin Adjustable Government | American Funds vs. Lord Abbett Government | American Funds vs. Virtus Seix Government | American Funds vs. Elfun Government Money |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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