Correlation Between Franklin Utilities and Fundvantage Trust
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities and Fundvantage Trust 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 Fundvantage Trust 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 Fundvantage Trust , you can compare the effects of market volatilities on Franklin Utilities and Fundvantage Trust 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 Fundvantage Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and Fundvantage Trust.
Diversification Opportunities for Franklin Utilities and Fundvantage Trust
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Fundvantage is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust 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 Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and Fundvantage Trust go up and down completely randomly.
Pair Corralation between Franklin Utilities and Fundvantage Trust
Assuming the 90 days horizon Franklin Utilities Fund is expected to generate 3.47 times more return on investment than Fundvantage Trust. However, Franklin Utilities is 3.47 times more volatile than Fundvantage Trust . It trades about 0.05 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.12 per unit of risk. If you would invest 2,090 in Franklin Utilities Fund on August 26, 2024 and sell it today you would earn a total of 483.00 from holding Franklin Utilities Fund or generate 23.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Utilities Fund vs. Fundvantage Trust
Performance |
| Timeline |
| Franklin Utilities |
| Fundvantage Trust |
Franklin Utilities and Fundvantage Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and Fundvantage Trust
The main advantage of trading using opposite Franklin Utilities and Fundvantage Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities position performs unexpectedly, Fundvantage Trust 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 Fundvantage Trust will offset losses from the drop in Fundvantage Trust's long position.| Franklin Utilities vs. Fundvantage Trust | Franklin Utilities vs. Ultra Short Term Fixed | Franklin Utilities vs. Limited Term Tax | Franklin Utilities vs. Barings Active Short |
| Fundvantage Trust vs. Polen Global Growth | Fundvantage Trust vs. Polen International Growth | Fundvantage Trust vs. Ddj Opportunistic High | Fundvantage Trust vs. Ddj Opportunistic High |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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