Correlation Between Franklin Strategic and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Franklin Convertible 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 Strategic and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Strategic Income and Franklin Vertible Securities, you can compare the effects of market volatilities on Franklin Strategic and Franklin Convertible 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 Strategic with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Franklin Convertible.
Diversification Opportunities for Franklin Strategic and Franklin Convertible
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Franklin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Income and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Franklin Strategic 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 Strategic Income are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Franklin Convertible go up and down completely randomly.
Pair Corralation between Franklin Strategic and Franklin Convertible
Assuming the 90 days horizon Franklin Strategic is expected to generate 1.42 times less return on investment than Franklin Convertible. But when comparing it to its historical volatility, Franklin Strategic Income is 2.6 times less risky than Franklin Convertible. It trades about 0.09 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,066 in Franklin Vertible Securities on August 24, 2024 and sell it today you would earn a total of 326.00 from holding Franklin Vertible Securities or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Income vs. Franklin Vertible Securities
Performance |
| Timeline |
| Franklin Strategic Income |
| Franklin Convertible |
Franklin Strategic and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Franklin Convertible
The main advantage of trading using opposite Franklin Strategic and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Franklin Strategic vs. Dodge Global Stock | Franklin Strategic vs. Vanguard Global Credit | Franklin Strategic vs. Wisdomtree Siegel Global | Franklin Strategic vs. The Hartford Global |
| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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