Correlation Between Franklin Dynatech and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Dynatech and Franklin Mutual 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 Dynatech and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Dynatech Fund and Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Dynatech and Franklin Mutual 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 Dynatech with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and Franklin Mutual.
Diversification Opportunities for Franklin Dynatech and Franklin Mutual
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Dynatech and Franklin Mutual
Assuming the 90 days horizon Franklin Dynatech Fund is expected to generate 1.55 times more return on investment than Franklin Mutual. However, Franklin Dynatech is 1.55 times more volatile than Franklin Mutual Beacon. It trades about 0.1 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.04 per unit of risk. If you would invest 9,755 in Franklin Dynatech Fund on August 26, 2024 and sell it today you would earn a total of 7,715 from holding Franklin Dynatech Fund or generate 79.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Dynatech Fund vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin Dynatech |
| Franklin Mutual Beacon |
Franklin Dynatech and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Dynatech and Franklin Mutual
The main advantage of trading using opposite Franklin Dynatech and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Dynatech position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Franklin Dynatech vs. Franklin Mutual Beacon | Franklin Dynatech vs. Templeton Developing Markets | Franklin Dynatech vs. Franklin Mutual Global | Franklin Dynatech vs. Franklin Mutual Global |
| Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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