Correlation Between Franklin Mutual and The Hartford
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and The Hartford 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 The Hartford 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 The Hartford Small, you can compare the effects of market volatilities on Franklin Mutual and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and The Hartford.
Diversification Opportunities for Franklin Mutual and The Hartford
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and The is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and The Hartford go up and down completely randomly.
Pair Corralation between Franklin Mutual and The Hartford
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.12 times less return on investment than The Hartford. But when comparing it to its historical volatility, Franklin Mutual Shares is 1.67 times less risky than The Hartford. It trades about 0.15 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,726 in The Hartford Small on September 3, 2024 and sell it today you would earn a total of 427.00 from holding The Hartford Small or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. The Hartford Small
Performance |
| Timeline |
| Franklin Mutual Shares |
| Hartford Small |
Franklin Mutual and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and The Hartford
The main advantage of trading using opposite Franklin Mutual and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Franklin Mutual vs. Blackrock Science Technology | Franklin Mutual vs. Columbia Global Technology | Franklin Mutual vs. Dreyfus Technology Growth | Franklin Mutual vs. Biotechnology Ultrasector Profund |
| The Hartford vs. The Hartford Midcap | The Hartford vs. Mfs Emerging Markets | The Hartford vs. Wells Fargo Special | The Hartford vs. Washington Mutual Investors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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