Correlation Between Franklin California and Scharf Global
Can any of the company-specific risk be diversified away by investing in both Franklin California and Scharf Global 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 California and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California Tax Free and Scharf Global Opportunity, you can compare the effects of market volatilities on Franklin California and Scharf Global 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 California with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Scharf Global.
Diversification Opportunities for Franklin California and Scharf Global
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Scharf is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California Tax Free and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity and Franklin California 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 California Tax Free are associated (or correlated) with Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of Franklin California i.e., Franklin California and Scharf Global go up and down completely randomly.
Pair Corralation between Franklin California and Scharf Global
Assuming the 90 days horizon Franklin California is expected to generate 3.46 times less return on investment than Scharf Global. But when comparing it to its historical volatility, Franklin California Tax Free is 2.9 times less risky than Scharf Global. It trades about 0.14 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,650 in Scharf Global Opportunity on November 27, 2024 and sell it today you would earn a total of 74.00 from holding Scharf Global Opportunity or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California Tax Free vs. Scharf Global Opportunity
Performance |
| Timeline |
| Franklin California Tax |
| Scharf Global Opportunity |
Franklin California and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Scharf Global
The main advantage of trading using opposite Franklin California and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Scharf Global 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 Scharf Global will offset losses from the drop in Scharf Global's long position.| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California vs. Franklin Mutual Global |
| Scharf Global vs. Harbor Vertible Securities | Scharf Global vs. Gabelli Convertible And | Scharf Global vs. Advent Claymore Convertible | Scharf Global vs. Invesco Vertible Securities |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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