Correlation Between Franklin Convertible and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Franklin Strategic 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 Convertible and Franklin Strategic 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 Strategic Income, you can compare the effects of market volatilities on Franklin Convertible and Franklin Strategic 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 Convertible with a short position of Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Franklin Strategic.
Diversification Opportunities for Franklin Convertible and Franklin Strategic
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Franklin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Franklin Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Income and Franklin Convertible 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Income has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Franklin Strategic go up and down completely randomly.
Pair Corralation between Franklin Convertible and Franklin Strategic
Assuming the 90 days horizon Franklin Vertible Securities is expected to generate 1.82 times more return on investment than Franklin Strategic. However, Franklin Convertible is 1.82 times more volatile than Franklin Strategic Income. It trades about 0.48 of its potential returns per unit of risk. Franklin Strategic Income is currently generating about 0.02 per unit of risk. If you would invest 2,300 in Franklin Vertible Securities on August 27, 2024 and sell it today you would earn a total of 141.00 from holding Franklin Vertible Securities or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Franklin Strategic Income
Performance |
| Timeline |
| Franklin Convertible |
| Franklin Strategic Income |
Franklin Convertible and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Franklin Strategic
The main advantage of trading using opposite Franklin Convertible and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.| Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends | Franklin Convertible vs. Franklin Natural Resources | Franklin Convertible vs. Aquagold International |
| Franklin Strategic vs. Franklin Mutual Beacon | Franklin Strategic vs. Templeton Developing Markets | Franklin Strategic vs. Franklin Mutual Global | Franklin Strategic vs. Franklin Mutual Global |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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