Correlation Between Franklin Income and Transamerica Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Transamerica Asset 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 Transamerica Asset 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 Transamerica Asset Allocation , you can compare the effects of market volatilities on Franklin Income and Transamerica Asset 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 Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Transamerica Asset.
Diversification Opportunities for Franklin Income and Transamerica Asset
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Transamerica is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset 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 Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Franklin Income i.e., Franklin Income and Transamerica Asset go up and down completely randomly.
Pair Corralation between Franklin Income and Transamerica Asset
Assuming the 90 days horizon Franklin Income Fund is expected to under-perform the Transamerica Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Income Fund is 2.7 times less risky than Transamerica Asset. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Transamerica Asset Allocation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,542 in Transamerica Asset Allocation on October 31, 2024 and sell it today you would earn a total of 2.00 from holding Transamerica Asset Allocation or generate 0.13% 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. Transamerica Asset Allocation
Performance |
| Timeline |
| Franklin Income |
| Transamerica Asset |
Franklin Income and Transamerica Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Transamerica Asset
The main advantage of trading using opposite Franklin Income and Transamerica Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Transamerica Asset 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 Transamerica Asset will offset losses from the drop in Transamerica Asset's long position.| Franklin Income vs. Ab Bond Inflation | Franklin Income vs. Ab Bond Inflation | Franklin Income vs. Atac Inflation Rotation | Franklin Income vs. Arrow Managed Futures |
| Transamerica Asset vs. Rationalpier 88 Convertible | Transamerica Asset vs. Gabelli Convertible And | Transamerica Asset vs. Lord Abbett Convertible | Transamerica Asset vs. Putnam Convertible Securities |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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