Correlation Between Franklin and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Franklin and Amcap Fund 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 and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and Amcap Fund Class, you can compare the effects of market volatilities on Franklin and Amcap Fund 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 with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Amcap Fund.
Diversification Opportunities for Franklin and Amcap Fund
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Amcap is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and Franklin 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 Government Money are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Franklin i.e., Franklin and Amcap Fund go up and down completely randomly.
Pair Corralation between Franklin and Amcap Fund
Assuming the 90 days horizon Franklin is expected to generate 3.93 times less return on investment than Amcap Fund. But when comparing it to its historical volatility, Franklin Government Money is 11.52 times less risky than Amcap Fund. It trades about 0.1 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,420 in Amcap Fund Class on November 2, 2024 and sell it today you would earn a total of 114.00 from holding Amcap Fund Class or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Amcap Fund Class
Performance |
| Timeline |
| Franklin Government Money |
| Amcap Fund Class |
Franklin and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Amcap Fund
The main advantage of trading using opposite Franklin and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| Franklin vs. Lord Abbett Health | Franklin vs. Deutsche Health And | Franklin vs. Highland Longshort Healthcare | Franklin vs. Blackrock Health Sciences |
| Amcap Fund vs. Tiaa Cref Real Estate | Amcap Fund vs. Neuberger Berman Real | Amcap Fund vs. Short Real Estate | Amcap Fund vs. Vy Clarion Real |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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