Correlation Between Franklin Convertible and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Metropolitan West 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 Metropolitan West 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 Metropolitan West Porate, you can compare the effects of market volatilities on Franklin Convertible and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Metropolitan West.
Diversification Opportunities for Franklin Convertible and Metropolitan West
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Metropolitan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Metropolitan West Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Porate 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Porate has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Metropolitan West go up and down completely randomly.
Pair Corralation between Franklin Convertible and Metropolitan West
Assuming the 90 days horizon Franklin Vertible Securities is expected to generate 1.4 times more return on investment than Metropolitan West. However, Franklin Convertible is 1.4 times more volatile than Metropolitan West Porate. It trades about 0.06 of its potential returns per unit of risk. Metropolitan West Porate is currently generating about 0.04 per unit of risk. If you would invest 2,063 in Franklin Vertible Securities on August 29, 2024 and sell it today you would earn a total of 392.00 from holding Franklin Vertible Securities or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Metropolitan West Porate
Performance |
| Timeline |
| Franklin Convertible |
| Metropolitan West Porate |
Franklin Convertible and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Metropolitan West
The main advantage of trading using opposite Franklin Convertible and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
| Metropolitan West vs. Nova Fund Class | Metropolitan West vs. Volumetric Fund Volumetric | Metropolitan West vs. Jp Morgan Smartretirement | Metropolitan West vs. Ab Small Cap |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |