Correlation Between Frontier Mfg and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Frontier Mfg and Franklin Mutual 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 Frontier Mfg and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Mfg Global and Franklin Mutual Shares, you can compare the effects of market volatilities on Frontier Mfg and Franklin Mutual 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 Frontier Mfg with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Mfg and Franklin Mutual.
Diversification Opportunities for Frontier Mfg and Franklin Mutual
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and Franklin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg Global and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and Frontier Mfg 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 Frontier Mfg Global are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Shares has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and Franklin Mutual go up and down completely randomly.
Pair Corralation between Frontier Mfg and Franklin Mutual
Assuming the 90 days horizon Frontier Mfg is expected to generate 1.13 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Frontier Mfg Global is 1.19 times less risky than Franklin Mutual. It trades about 0.11 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,596 in Franklin Mutual Shares on September 3, 2024 and sell it today you would earn a total of 339.00 from holding Franklin Mutual Shares or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Mfg Global vs. Franklin Mutual Shares
Performance |
| Timeline |
| Frontier Mfg Global |
| Franklin Mutual Shares |
Frontier Mfg and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Mfg and Franklin Mutual
The main advantage of trading using opposite Frontier Mfg and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Mfg position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Frontier Mfg vs. Astor Longshort Fund | Frontier Mfg vs. Barings Active Short | Frontier Mfg vs. Rbc Short Duration | Frontier Mfg vs. Calvert Short Duration |
| Franklin Mutual vs. Franklin Mutual Quest | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Franklin Mutual European |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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