Correlation Between Franklin Strategic and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Franklin Growth 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 Growth 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 Growth Fund, you can compare the effects of market volatilities on Franklin Strategic and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Franklin Growth.
Diversification Opportunities for Franklin Strategic and Franklin Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Income and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Franklin Growth go up and down completely randomly.
Pair Corralation between Franklin Strategic and Franklin Growth
Assuming the 90 days horizon Franklin Strategic is expected to generate 2.64 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Franklin Strategic Income is 3.94 times less risky than Franklin Growth. It trades about 0.08 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11,021 in Franklin Growth Fund on November 2, 2024 and sell it today you would earn a total of 2,776 from holding Franklin Growth Fund or generate 25.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Income vs. Franklin Growth Fund
Performance |
| Timeline |
| Franklin Strategic Income |
| Franklin Growth |
Franklin Strategic and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Franklin Growth
The main advantage of trading using opposite Franklin Strategic and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Franklin Strategic vs. Ultra Short Fixed Income | Franklin Strategic vs. Oakhurst Short Duration | Franklin Strategic vs. Cmg Ultra Short | Franklin Strategic vs. Nuveen Short Term |
| Franklin Growth vs. Voya Target Retirement | Franklin Growth vs. College Retirement Equities | Franklin Growth vs. Wilmington Trust Retirement | Franklin Growth vs. Calvert Moderate Allocation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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