Correlation Between Franklin Mutual and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and American Funds 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 Mutual and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Shares and American Funds Growth, you can compare the effects of market volatilities on Franklin Mutual and American Funds 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 Mutual with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and American Funds.
Diversification Opportunities for Franklin Mutual and American Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth and Franklin Mutual 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 Mutual Shares are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and American Funds go up and down completely randomly.
Pair Corralation between Franklin Mutual and American Funds
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 1.01 times more return on investment than American Funds. However, Franklin Mutual is 1.01 times more volatile than American Funds Growth. It trades about 0.16 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.1 per unit of risk. If you would invest 2,780 in Franklin Mutual Shares on August 29, 2024 and sell it today you would earn a total of 145.00 from holding Franklin Mutual Shares or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Franklin Mutual Shares vs. American Funds Growth
Performance |
| Timeline |
| Franklin Mutual Shares |
| American Funds Growth |
Franklin Mutual and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and American Funds
The main advantage of trading using opposite Franklin Mutual and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Franklin Mutual vs. Huber Capital Diversified | Franklin Mutual vs. Evaluator Conservative Rms | Franklin Mutual vs. Blackrock Conservative Prprdptfinstttnl | Franklin Mutual vs. Prudential Core Conservative |
| American Funds vs. Pace Large Value | American Funds vs. Tax Managed Large Cap | American Funds vs. Fundamental Large Cap | American Funds vs. Qs Large Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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