Correlation Between Franklin Strategic and Tax-managed International
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic and Tax-managed International 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 Tax-managed International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Strategic Mortgage and Tax Managed International Equity, you can compare the effects of market volatilities on Franklin Strategic and Tax-managed International 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 Tax-managed International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Tax-managed International.
Diversification Opportunities for Franklin Strategic and Tax-managed International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Tax-managed is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Mortgage and Tax Managed International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax-managed International 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 Mortgage are associated (or correlated) with Tax-managed International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax-managed International has no effect on the direction of Franklin Strategic i.e., Franklin Strategic and Tax-managed International go up and down completely randomly.
Pair Corralation between Franklin Strategic and Tax-managed International
Assuming the 90 days horizon Franklin Strategic Mortgage is expected to generate 0.5 times more return on investment than Tax-managed International. However, Franklin Strategic Mortgage is 1.99 times less risky than Tax-managed International. It trades about -0.04 of its potential returns per unit of risk. Tax Managed International Equity is currently generating about -0.05 per unit of risk. If you would invest 770.00 in Franklin Strategic Mortgage on October 26, 2024 and sell it today you would lose (6.00) from holding Franklin Strategic Mortgage or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Mortgage vs. Tax Managed International Equi
Performance |
| Timeline |
| Franklin Strategic |
| Tax-managed International |
Franklin Strategic and Tax-managed International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Tax-managed International
The main advantage of trading using opposite Franklin Strategic and Tax-managed International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic position performs unexpectedly, Tax-managed International 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 Tax-managed International will offset losses from the drop in Tax-managed International's long position.| Franklin Strategic vs. Qs Small Capitalization | Franklin Strategic vs. Arrow Dwa Balanced | Franklin Strategic vs. Dgi Investment Trust | Franklin Strategic vs. Rbb Fund |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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