Correlation Between Franklin and Franklin Income
Can any of the company-specific risk be diversified away by investing in both Franklin and Franklin Income 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 and Franklin Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Securities and Franklin Income Fund, you can compare the effects of market volatilities on Franklin and Franklin Income 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 with a short position of Franklin Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Franklin Income.
Diversification Opportunities for Franklin and Franklin Income
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 Government Securities and Franklin Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Income and Franklin 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 Government Securities are associated (or correlated) with Franklin Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Income has no effect on the direction of Franklin i.e., Franklin and Franklin Income go up and down completely randomly.
Pair Corralation between Franklin and Franklin Income
Assuming the 90 days horizon Franklin is expected to generate 4.06 times less return on investment than Franklin Income. In addition to that, Franklin is 1.03 times more volatile than Franklin Income Fund. It trades about 0.02 of its total potential returns per unit of risk. Franklin Income Fund is currently generating about 0.09 per unit of volatility. If you would invest 205.00 in Franklin Income Fund on August 27, 2024 and sell it today you would earn a total of 31.00 from holding Franklin Income Fund or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Securities vs. Franklin Income Fund
Performance |
| Timeline |
| Franklin Government |
| Franklin Income |
Franklin and Franklin Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Franklin Income
The main advantage of trading using opposite Franklin and Franklin Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Franklin Income 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 Income will offset losses from the drop in Franklin Income's long position.| Franklin vs. Franklin Mutual Beacon | Franklin vs. Templeton Developing Markets | Franklin vs. Franklin Mutual Global | Franklin vs. Franklin Mutual Global |
| Franklin Income vs. Franklin Mutual Beacon | Franklin Income vs. Templeton Developing Markets | Franklin Income vs. Franklin Mutual Global | Franklin Income vs. Franklin Mutual Global |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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