Correlation Between Franklin Growth and Diversified Income
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Diversified Income 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 Diversified Income 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 Diversified Income Fund, you can compare the effects of market volatilities on Franklin Growth and Diversified Income 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 Diversified Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Diversified Income.
Diversification Opportunities for Franklin Growth and Diversified Income
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Diversified is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Diversified Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Income 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 Diversified Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Income has no effect on the direction of Franklin Growth i.e., Franklin Growth and Diversified Income go up and down completely randomly.
Pair Corralation between Franklin Growth and Diversified Income
Assuming the 90 days horizon Franklin Growth Opportunities is expected to under-perform the Diversified Income. In addition to that, Franklin Growth is 7.39 times more volatile than Diversified Income Fund. It trades about -0.17 of its total potential returns per unit of risk. Diversified Income Fund is currently generating about 0.08 per unit of volatility. If you would invest 960.00 in Diversified Income Fund on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Diversified Income Fund or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Diversified Income Fund
Performance |
| Timeline |
| Franklin Growth Oppo |
| Diversified Income |
Franklin Growth and Diversified Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Diversified Income
The main advantage of trading using opposite Franklin Growth and Diversified Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Diversified Income 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 Diversified Income will offset losses from the drop in Diversified Income's long position.| Franklin Growth vs. Nationwide Government Bond | Franklin Growth vs. Voya Government Money | Franklin Growth vs. Dreyfus Government Cash | Franklin Growth vs. Hsbc Government Money |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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