Correlation Between Franklin Federal and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Federal and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Franklin Mutual.
Diversification Opportunities for Franklin Federal and Franklin Mutual
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FRANKLIN and Franklin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Franklin Federal i.e., Franklin Federal and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Federal and Franklin Mutual
Assuming the 90 days horizon Franklin Federal is expected to generate 3.03 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.16 times less risky than Franklin Mutual. It trades about 0.18 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,522 in Franklin Mutual Beacon on August 26, 2024 and sell it today you would earn a total of 210.00 from holding Franklin Mutual Beacon or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin Federal Lim |
| Franklin Mutual Beacon |
Franklin Federal and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Franklin Mutual
The main advantage of trading using opposite Franklin Federal and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
| Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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