Correlation Between Franklin Equity and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Equity and Franklin Growth 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 Growth 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 Growth Fund, you can compare the effects of market volatilities on Franklin Equity and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and Franklin Growth.
Diversification Opportunities for Franklin Equity and Franklin Growth
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Franklin Equity i.e., Franklin Equity and Franklin Growth go up and down completely randomly.
Pair Corralation between Franklin Equity and Franklin Growth
Assuming the 90 days horizon Franklin Equity Income is expected to generate 0.69 times more return on investment than Franklin Growth. However, Franklin Equity Income is 1.45 times less risky than Franklin Growth. It trades about 0.14 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.0 per unit of risk. If you would invest 3,125 in Franklin Equity Income on November 30, 2024 and sell it today you would earn a total of 117.00 from holding Franklin Equity Income or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Equity Income vs. Franklin Growth Fund
Performance |
| Timeline |
| Franklin Equity Income |
| Franklin Growth |
Franklin Equity and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Equity and Franklin Growth
The main advantage of trading using opposite Franklin Equity and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Equity position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Franklin Equity vs. Franklin Growth Fund | Franklin Equity vs. Franklin Total Return | Franklin Equity vs. Franklin Rising Dividends | Franklin Equity vs. Franklin Mutual Shares |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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