Correlation Between Franklin Moderate and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate 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 Franklin Moderate and Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Moderate 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 Franklin Moderate with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Franklin Mutual.
Diversification Opportunities for Franklin Moderate and Franklin Mutual
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 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 Beacon has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Moderate and Franklin Mutual
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.47 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Franklin Moderate Allocation is 1.44 times less risky than Franklin Mutual. It trades about 0.35 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,675 in Franklin Mutual Beacon on September 1, 2024 and sell it today you would earn a total of 76.00 from holding Franklin Mutual Beacon or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin Moderate |
| Franklin Mutual Beacon |
Franklin Moderate and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Franklin Mutual
The main advantage of trading using opposite Franklin Moderate and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate 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.| Franklin Moderate vs. Jennison Natural Resources | Franklin Moderate vs. Oil Gas Ultrasector | Franklin Moderate vs. Clearbridge Energy Mlp | Franklin Moderate vs. Alpsalerian Energy Infrastructure |
| Franklin Mutual vs. Aqr Risk Balanced Modities | Franklin Mutual vs. Strategic Allocation Aggressive | Franklin Mutual vs. Western Asset High | Franklin Mutual vs. Needham Aggressive Growth |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |