Correlation Between Franklin Income and James Balanced
Can any of the company-specific risk be diversified away by investing in both Franklin Income and James Balanced 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 Income and James Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income Fund and James Balanced Golden, you can compare the effects of market volatilities on Franklin Income and James Balanced 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 Income with a short position of James Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and James Balanced.
Diversification Opportunities for Franklin Income and James Balanced
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and James is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and James Balanced Golden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Balanced Golden and Franklin Income 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 Income Fund are associated (or correlated) with James Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Balanced Golden has no effect on the direction of Franklin Income i.e., Franklin Income and James Balanced go up and down completely randomly.
Pair Corralation between Franklin Income and James Balanced
Assuming the 90 days horizon Franklin Income Fund is expected to under-perform the James Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Income Fund is 1.67 times less risky than James Balanced. The mutual fund trades about -0.09 of its potential returns per unit of risk. The James Balanced Golden is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,314 in James Balanced Golden on September 13, 2024 and sell it today you would lose (27.00) from holding James Balanced Golden or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Income Fund vs. James Balanced Golden
Performance |
| Timeline |
| Franklin Income |
| James Balanced Golden |
Franklin Income and James Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and James Balanced
The main advantage of trading using opposite Franklin Income and James Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, James Balanced 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 James Balanced will offset losses from the drop in James Balanced's long position.| Franklin Income vs. Franklin Mutual Beacon | Franklin Income vs. Templeton Developing Markets | Franklin Income vs. Franklin Mutual Global | Franklin Income vs. Franklin Mutual Global |
| James Balanced vs. Permanent Portfolio Class | James Balanced vs. Berwyn Income Fund | James Balanced vs. Large Cap Fund | James Balanced vs. Westcore Plus Bond |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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