Correlation Between Franklin Income and Henderson Global
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Henderson Global 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 Income and Henderson Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income Fund and Henderson Global Equity, you can compare the effects of market volatilities on Franklin Income and Henderson Global 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 Income with a short position of Henderson Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Henderson Global.
Diversification Opportunities for Franklin Income and Henderson Global
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Henderson is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and Henderson Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Global Equity and Franklin Income 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 Income Fund are associated (or correlated) with Henderson Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Global Equity has no effect on the direction of Franklin Income i.e., Franklin Income and Henderson Global go up and down completely randomly.
Pair Corralation between Franklin Income and Henderson Global
Assuming the 90 days horizon Franklin Income Fund is expected to under-perform the Henderson Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Income Fund is 1.72 times less risky than Henderson Global. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Henderson Global Equity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 617.00 in Henderson Global Equity on September 13, 2024 and sell it today you would earn a total of 3.00 from holding Henderson Global Equity or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Income Fund vs. Henderson Global Equity
Performance |
| Timeline |
| Franklin Income |
| Henderson Global Equity |
Franklin Income and Henderson Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Henderson Global
The main advantage of trading using opposite Franklin Income and Henderson Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Henderson Global 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 Henderson Global will offset losses from the drop in Henderson Global's long position.| Franklin Income vs. Boston Partners Longshort | Franklin Income vs. Cmg Ultra Short | Franklin Income vs. Blackrock Short Term Inflat Protected | Franklin Income vs. Quantitative Longshort Equity |
| Henderson Global vs. Baron Emerging Markets | Henderson Global vs. Df Dent Midcap | Henderson Global vs. The Brown Capital | Henderson Global vs. Fidelity International 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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