Correlation Between Franklin Federal and Mfs International
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Mfs 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 Federal and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Mfs International Large, you can compare the effects of market volatilities on Franklin Federal and Mfs 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 Federal with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Mfs International.
Diversification Opportunities for Franklin Federal and Mfs International
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Mfs is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Mfs International Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Large and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Mfs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs International Large has no effect on the direction of Franklin Federal i.e., Franklin Federal and Mfs International go up and down completely randomly.
Pair Corralation between Franklin Federal and Mfs International
Assuming the 90 days horizon Franklin Federal is expected to generate 3.1 times less return on investment than Mfs International. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.39 times less risky than Mfs International. It trades about 0.18 of its potential returns per unit of risk. Mfs International Large is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,260 in Mfs International Large on September 2, 2024 and sell it today you would earn a total of 177.00 from holding Mfs International Large or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Mfs International Large
Performance |
| Timeline |
| Franklin Federal Lim |
| Mfs International Large |
Franklin Federal and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Mfs International
The main advantage of trading using opposite Franklin Federal and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Mfs 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 Mfs International will offset losses from the drop in Mfs International's long position.| Franklin Federal vs. Eip Growth And | Franklin Federal vs. Kinetics Small Cap | Franklin Federal vs. Chase Growth Fund | Franklin Federal vs. T Rowe Price |
| Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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