Correlation Between Franklin Growth and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and American 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 American 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 American Funds 2065, you can compare the effects of market volatilities on Franklin Growth and American 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and American Funds.
Diversification Opportunities for Franklin Growth and American Funds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of Franklin Growth i.e., Franklin Growth and American Funds go up and down completely randomly.
Pair Corralation between Franklin Growth and American Funds
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 1.72 times more return on investment than American Funds. However, Franklin Growth is 1.72 times more volatile than American Funds 2065. It trades about 0.26 of its potential returns per unit of risk. American Funds 2065 is currently generating about 0.26 per unit of risk. If you would invest 6,014 in Franklin Growth Opportunities on September 4, 2024 and sell it today you would earn a total of 330.00 from holding Franklin Growth Opportunities or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. American Funds 2065
Performance |
| Timeline |
| Franklin Growth Oppo |
| American Funds 2065 |
Franklin Growth and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and American Funds
The main advantage of trading using opposite Franklin Growth and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, American 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 American Funds will offset losses from the drop in American 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 |
| American Funds vs. Real Estate Ultrasector | American Funds vs. Simt Real Estate | American Funds vs. Guggenheim Risk Managed | American Funds vs. Forum Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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