Correlation Between Franklin Moderate and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Multisector Bond 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 Moderate and Multisector Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Multisector Bond Sma, you can compare the effects of market volatilities on Franklin Moderate and Multisector Bond 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 Moderate with a short position of Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Multisector Bond.
Diversification Opportunities for Franklin Moderate and Multisector Bond
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FRANKLIN and Multisector is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Multisector Bond go up and down completely randomly.
Pair Corralation between Franklin Moderate and Multisector Bond
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.02 times less return on investment than Multisector Bond. In addition to that, Franklin Moderate is 1.6 times more volatile than Multisector Bond Sma. It trades about 0.14 of its total potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.23 per unit of volatility. If you would invest 1,348 in Multisector Bond Sma on August 30, 2024 and sell it today you would earn a total of 20.00 from holding Multisector Bond Sma or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Multisector Bond Sma
Performance |
| Timeline |
| Franklin Moderate |
| Multisector Bond Sma |
Franklin Moderate and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Multisector Bond
The main advantage of trading using opposite Franklin Moderate and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Franklin Moderate vs. American Balanced Fund | Franklin Moderate vs. American Balanced Fund | Franklin Moderate vs. HUMANA INC | Franklin Moderate vs. Aquagold International |
| Multisector Bond vs. HUMANA INC | Multisector Bond vs. Aquagold International | Multisector Bond vs. Barloworld Ltd ADR | Multisector Bond vs. Morningstar Unconstrained Allocation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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