Correlation Between Franklin Templeton and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and MFS Investment 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 Templeton and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton Limited and MFS Investment Grade, you can compare the effects of market volatilities on Franklin Templeton and MFS Investment 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 Templeton with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and MFS Investment.
Diversification Opportunities for Franklin Templeton and MFS Investment
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and MFS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Limited and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Franklin Templeton 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 Templeton Limited are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and MFS Investment go up and down completely randomly.
Pair Corralation between Franklin Templeton and MFS Investment
Considering the 90-day investment horizon Franklin Templeton Limited is expected to generate 0.91 times more return on investment than MFS Investment. However, Franklin Templeton Limited is 1.1 times less risky than MFS Investment. It trades about 0.08 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.04 per unit of risk. If you would invest 520.00 in Franklin Templeton Limited on November 2, 2024 and sell it today you would earn a total of 142.00 from holding Franklin Templeton Limited or generate 27.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Templeton Limited vs. MFS Investment Grade
Performance |
| Timeline |
| Franklin Templeton |
| MFS Investment Grade |
Franklin Templeton and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and MFS Investment
The main advantage of trading using opposite Franklin Templeton and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, MFS Investment 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 MFS Investment will offset losses from the drop in MFS Investment's long position.| Franklin Templeton vs. MFS Investment Grade | Franklin Templeton vs. Eaton Vance National | Franklin Templeton vs. Rivernorth Opportunistic Municipalome | Franklin Templeton vs. RiverNorth Managed Duration |
| MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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