Correlation Between Franklin International and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin International 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 International 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 International Growth and Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin International 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 International with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and Franklin Mutual.
Diversification Opportunities for Franklin International and Franklin Mutual
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Franklin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Growth 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 International 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 International Growth 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 International i.e., Franklin International and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin International and Franklin Mutual
Assuming the 90 days horizon Franklin International Growth is expected to under-perform the Franklin Mutual. In addition to that, Franklin International is 1.47 times more volatile than Franklin Mutual Beacon. It trades about -0.09 of its total potential returns per unit of risk. Franklin Mutual Beacon is currently generating about -0.11 per unit of volatility. If you would invest 1,735 in Franklin Mutual Beacon on September 12, 2024 and sell it today you would lose (21.00) from holding Franklin Mutual Beacon or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin International Growth vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin International |
| Franklin Mutual Beacon |
Franklin International and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin International and Franklin Mutual
The main advantage of trading using opposite Franklin International and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin International 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 International vs. Jpmorgan High Yield | Franklin International vs. Janus High Yield Fund | Franklin International vs. T Rowe Price | Franklin International vs. Neuberger Berman Income |
| Franklin Mutual vs. Champlain Mid Cap | Franklin Mutual vs. Qs Moderate Growth | Franklin Mutual vs. Mid Cap Growth | 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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