Correlation Between Franklin Utilities and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities 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 Utilities 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 Utilities Fund and Franklin Vertible Securities, you can compare the effects of market volatilities on Franklin Utilities 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 Utilities with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and Franklin Convertible.
Diversification Opportunities for Franklin Utilities and Franklin Convertible
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund 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 Utilities 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 Utilities Fund 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 Utilities i.e., Franklin Utilities and Franklin Convertible go up and down completely randomly.
Pair Corralation between Franklin Utilities and Franklin Convertible
Assuming the 90 days horizon Franklin Utilities is expected to generate 1.6 times less return on investment than Franklin Convertible. In addition to that, Franklin Utilities is 1.85 times more volatile than Franklin Vertible Securities. It trades about 0.16 of its total potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.48 per unit of volatility. If you would invest 2,300 in Franklin Vertible Securities on August 28, 2024 and sell it today you would earn a total of 141.00 from holding Franklin Vertible Securities or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Utilities Fund vs. Franklin Vertible Securities
Performance |
| Timeline |
| Franklin Utilities |
| Franklin Convertible |
Franklin Utilities and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and Franklin Convertible
The main advantage of trading using opposite Franklin Utilities and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities 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 Utilities vs. Angel Oak Multi Strategy | Franklin Utilities vs. Origin Emerging Markets | Franklin Utilities vs. Transamerica Emerging Markets | Franklin Utilities vs. Ep Emerging Markets |
| Franklin Convertible vs. Franklin Mutual Beacon | Franklin Convertible vs. Templeton Developing Markets | Franklin Convertible vs. Franklin Mutual Global | Franklin Convertible vs. Franklin Mutual Global |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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