Correlation Between Franklin Growth and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Growth 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 Growth 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 Growth Opportunities and Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Growth 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 Growth with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Franklin Mutual.
Diversification Opportunities for Franklin Growth and Franklin Mutual
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Franklin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities 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 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 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 Growth i.e., Franklin Growth and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Growth and Franklin Mutual
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 1.6 times more return on investment than Franklin Mutual. However, Franklin Growth is 1.6 times more volatile than Franklin Mutual Beacon. It trades about 0.07 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.03 per unit of risk. If you would invest 4,137 in Franklin Growth Opportunities on November 9, 2024 and sell it today you would earn a total of 1,791 from holding Franklin Growth Opportunities or generate 43.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin Growth Oppo |
| Franklin Mutual Beacon |
Franklin Growth and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Franklin Mutual
The main advantage of trading using opposite Franklin Growth and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth 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 Growth vs. Blackrock Financial Institutions | Franklin Growth vs. Prudential Financial Services | Franklin Growth vs. Goldman Sachs Financial | Franklin Growth vs. Putnam Global Financials |
| Franklin Mutual vs. Avantis Large Cap | Franklin Mutual vs. Guidemark Large Cap | Franklin Mutual vs. Blackrock Large Cap | Franklin Mutual vs. Qs 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 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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