Correlation Between Franklin Vertible and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Franklin Vertible and Franklin Equity 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 Vertible and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Franklin Equity Income, you can compare the effects of market volatilities on Franklin Vertible and Franklin Equity 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 Vertible with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Vertible and Franklin Equity.
Diversification Opportunities for Franklin Vertible and Franklin Equity
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Franklin Vertible 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 Vertible Securities are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Franklin Vertible i.e., Franklin Vertible and Franklin Equity go up and down completely randomly.
Pair Corralation between Franklin Vertible and Franklin Equity
Assuming the 90 days horizon Franklin Vertible is expected to generate 2.05 times less return on investment than Franklin Equity. But when comparing it to its historical volatility, Franklin Vertible Securities is 1.36 times less risky than Franklin Equity. It trades about 0.2 of its potential returns per unit of risk. Franklin Equity Income is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,150 in Franklin Equity Income on November 5, 2024 and sell it today you would earn a total of 129.00 from holding Franklin Equity Income or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Franklin Equity Income
Performance |
| Timeline |
| Franklin Vertible |
| Franklin Equity Income |
Franklin Vertible and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Vertible and Franklin Equity
The main advantage of trading using opposite Franklin Vertible and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Vertible position performs unexpectedly, Franklin Equity 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 Franklin Equity will offset losses from the drop in Franklin Equity's long position.| Franklin Vertible vs. Franklin Equity Income | Franklin Vertible vs. Franklin Utilities Fund | Franklin Vertible vs. Franklin Strategic Income | Franklin Vertible vs. Franklin Rising Dividends |
| Franklin Equity vs. Franklin Growth Fund | Franklin Equity vs. Franklin Total Return | Franklin Equity vs. Franklin Rising Dividends | Franklin Equity vs. Franklin Mutual Shares |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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