Correlation Between Franklin Growth and Franklin Balance
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Franklin Balance 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 Growth and Franklin Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Fund and Franklin Balance Sheet, you can compare the effects of market volatilities on Franklin Growth and Franklin Balance 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 Growth with a short position of Franklin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Franklin Balance.
Diversification Opportunities for Franklin Growth and Franklin Balance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FRANKLIN and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Fund and Franklin Balance Sheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balance Sheet and Franklin Growth 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 Growth Fund are associated (or correlated) with Franklin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balance Sheet has no effect on the direction of Franklin Growth i.e., Franklin Growth and Franklin Balance go up and down completely randomly.
Pair Corralation between Franklin Growth and Franklin Balance
Assuming the 90 days horizon Franklin Growth is expected to generate 1.58 times less return on investment than Franklin Balance. But when comparing it to its historical volatility, Franklin Growth Fund is 1.18 times less risky than Franklin Balance. It trades about 0.26 of its potential returns per unit of risk. Franklin Balance Sheet is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,752 in Franklin Balance Sheet on September 1, 2024 and sell it today you would earn a total of 267.00 from holding Franklin Balance Sheet or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Fund vs. Franklin Balance Sheet
Performance |
| Timeline |
| Franklin Growth |
| Franklin Balance Sheet |
Franklin Growth and Franklin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Franklin Balance
The main advantage of trading using opposite Franklin Growth and Franklin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Franklin Balance 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 Balance will offset losses from the drop in Franklin Balance's long position.| Franklin Growth vs. Mfs International Diversification | Franklin Growth vs. John Hancock Bond | Franklin Growth vs. Prudential Total Return | Franklin Growth vs. New World 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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