Correlation Between Franklin Growth and Northern Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Northern Funds 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 Growth and Northern Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Opportunities and Northern Funds , you can compare the effects of market volatilities on Franklin Growth and Northern Funds 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 Growth with a short position of Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Northern Funds.
Diversification Opportunities for Franklin Growth and Northern Funds
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Northern is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Northern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Funds and Franklin Growth 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 Growth Opportunities are associated (or correlated) with Northern Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Funds has no effect on the direction of Franklin Growth i.e., Franklin Growth and Northern Funds go up and down completely randomly.
Pair Corralation between Franklin Growth and Northern Funds
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 1.17 times more return on investment than Northern Funds. However, Franklin Growth is 1.17 times more volatile than Northern Funds . It trades about 0.07 of its potential returns per unit of risk. Northern Funds is currently generating about 0.02 per unit of risk. If you would invest 4,300 in Franklin Growth Opportunities on September 4, 2024 and sell it today you would earn a total of 2,044 from holding Franklin Growth Opportunities or generate 47.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Northern Funds
Performance |
| Timeline |
| Franklin Growth Oppo |
| Northern Funds |
Franklin Growth and Northern Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Northern Funds
The main advantage of trading using opposite Franklin Growth and Northern Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Northern Funds 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 Northern Funds will offset losses from the drop in Northern Funds' long position.| Franklin Growth vs. Ab Global Risk | Franklin Growth vs. Artisan Global Unconstrained | Franklin Growth vs. Ab Global Real | Franklin Growth vs. Dreyfusstandish Global Fixed |
| Northern Funds vs. Siit Global Managed | Northern Funds vs. Dreyfusstandish Global Fixed | Northern Funds vs. Legg Mason Global | Northern Funds vs. Dreyfusstandish Global Fixed |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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