Correlation Between Franklin Strategic and Franklin Total
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Franklin Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Franklin Strategic and Franklin Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Franklin Total.
Diversification Opportunities for Franklin Strategic and Franklin Total
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Income and Franklin Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Total Return has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Franklin Total go up and down completely randomly.
Pair Corralation between Franklin Strategic and Franklin Total
Assuming the 90 days horizon Franklin Strategic Income is expected to under-perform the Franklin Total. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Strategic Income is 1.03 times less risky than Franklin Total. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Franklin Total Return is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 836.00 in Franklin Total Return on November 5, 2024 and sell it today you would lose (13.00) from holding Franklin Total Return or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Income vs. Franklin Total Return
Performance |
| Timeline |
| Franklin Strategic Income |
| Franklin Total Return |
Franklin Strategic and Franklin Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Franklin Total
The main advantage of trading using opposite Franklin Strategic and Franklin Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Franklin Total 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 Total will offset losses from the drop in Franklin Total's long position.| Franklin Strategic vs. Goehring Rozencwajg Resources | Franklin Strategic vs. World Energy Fund | Franklin Strategic vs. Firsthand Alternative Energy | Franklin Strategic vs. Short Oil Gas |
| Franklin Total vs. Aqr Sustainable Long Short | Franklin Total vs. Nuveen Short Term | Franklin Total vs. Transam Short Term Bond | Franklin Total vs. Blackrock Short Obligations |
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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