Correlation Between Franklin Strategic and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Franklin Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Franklin Strategic and Franklin Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Franklin Equity.
Diversification Opportunities for Franklin Strategic and Franklin Equity
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Franklin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Income and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Franklin Equity go up and down completely randomly.
Pair Corralation between Franklin Strategic and Franklin Equity
Assuming the 90 days horizon Franklin Strategic Income is expected to generate 0.16 times more return on investment than Franklin Equity. However, Franklin Strategic Income is 6.42 times less risky than Franklin Equity. It trades about -0.13 of its potential returns per unit of risk. Franklin Equity Income is currently generating about -0.11 per unit of risk. If you would invest 828.00 in Franklin Strategic Income on January 18, 2025 and sell it today you would lose (9.00) from holding Franklin Strategic Income or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Income vs. Franklin Equity Income
Performance |
| Timeline |
| Franklin Strategic Income |
| Franklin Equity Income |
Franklin Strategic and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Franklin Equity
The main advantage of trading using opposite Franklin Strategic and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Franklin Strategic vs. Pnc Balanced Allocation | Franklin Strategic vs. Growth Allocation Fund | Franklin Strategic vs. T Rowe Price | Franklin Strategic vs. Morningstar Unconstrained Allocation |
| Franklin Equity vs. Ab Global Bond | Franklin Equity vs. Ab Bond Inflation | Franklin Equity vs. Ambrus Core Bond | Franklin Equity vs. Dreyfusstandish Global Fixed |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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