Correlation Between Franklin Moderate and Thornburg Limited
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Thornburg Limited 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 Thornburg Limited 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 Thornburg Limited Term, you can compare the effects of market volatilities on Franklin Moderate and Thornburg Limited 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 Thornburg Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Thornburg Limited.
Diversification Opportunities for Franklin Moderate and Thornburg Limited
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Thornburg is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Thornburg Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Limited Term 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 Thornburg Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Limited Term has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Thornburg Limited go up and down completely randomly.
Pair Corralation between Franklin Moderate and Thornburg Limited
Assuming the 90 days horizon Franklin Moderate Allocation is expected to generate 3.23 times more return on investment than Thornburg Limited. However, Franklin Moderate is 3.23 times more volatile than Thornburg Limited Term. It trades about 0.12 of its potential returns per unit of risk. Thornburg Limited Term is currently generating about 0.14 per unit of risk. If you would invest 1,593 in Franklin Moderate Allocation on October 25, 2024 and sell it today you would earn a total of 19.00 from holding Franklin Moderate Allocation or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Thornburg Limited Term
Performance |
| Timeline |
| Franklin Moderate |
| Thornburg Limited Term |
Franklin Moderate and Thornburg Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Thornburg Limited
The main advantage of trading using opposite Franklin Moderate and Thornburg Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Thornburg Limited 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 Thornburg Limited will offset losses from the drop in Thornburg Limited's long position.| Franklin Moderate vs. Issachar Fund Class | Franklin Moderate vs. Eip Growth And | Franklin Moderate vs. Credit Suisse Floating | Franklin Moderate vs. Tfa Quantitative |
| Thornburg Limited vs. Growth Allocation Fund | Thornburg Limited vs. Franklin Moderate Allocation | Thornburg Limited vs. Hartford Moderate Allocation | Thornburg Limited vs. Tax Managed 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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