Correlation Between Franklin Equity and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Equity and Franklin Convertible 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 Equity and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Equity Income and Franklin Vertible Securities, you can compare the effects of market volatilities on Franklin Equity and Franklin Convertible 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 Equity with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and Franklin Convertible.
Diversification Opportunities for Franklin Equity and Franklin Convertible
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Franklin Equity 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 Equity Income are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Franklin Equity i.e., Franklin Equity and Franklin Convertible go up and down completely randomly.
Pair Corralation between Franklin Equity and Franklin Convertible
Assuming the 90 days horizon Franklin Equity Income is expected to generate 1.13 times more return on investment than Franklin Convertible. However, Franklin Equity is 1.13 times more volatile than Franklin Vertible Securities. It trades about 0.07 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.05 per unit of risk. If you would invest 2,804 in Franklin Equity Income on August 24, 2024 and sell it today you would earn a total of 776.00 from holding Franklin Equity Income or generate 27.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Equity Income vs. Franklin Vertible Securities
Performance |
| Timeline |
| Franklin Equity Income |
| Franklin Convertible |
Franklin Equity and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Equity and Franklin Convertible
The main advantage of trading using opposite Franklin Equity and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Equity position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Franklin Equity vs. Federated Mdt Large | Franklin Equity vs. Nationwide Ziegler Nyse | Franklin Equity vs. HUMANA INC | Franklin Equity vs. Aquagold International |
| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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