Correlation Between Growth Fund and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Franklin Growth 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 Growth Fund and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Franklin Growth Fund, you can compare the effects of market volatilities on Growth Fund and Franklin Growth 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 Growth Fund with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Franklin Growth.
Diversification Opportunities for Growth Fund and Franklin Growth
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth and Growth Fund 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 Growth Fund Of are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Franklin Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Franklin Growth
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.93 times more return on investment than Franklin Growth. However, Growth Fund Of is 1.07 times less risky than Franklin Growth. It trades about 0.08 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 4,781 in Growth Fund Of on September 3, 2024 and sell it today you would earn a total of 2,354 from holding Growth Fund Of or generate 49.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Franklin Growth Fund
Performance |
| Timeline |
| Growth Fund |
| Franklin Growth |
Growth Fund and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Franklin Growth
The main advantage of trading using opposite Growth Fund and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Growth Fund vs. Ambrus Core Bond | Growth Fund vs. The Fixed Income | Growth Fund vs. Artisan High Income | Growth Fund vs. Bbh Intermediate Municipal |
| Franklin Growth vs. American Funds The | Franklin Growth vs. American Funds The | Franklin Growth vs. Growth Fund Of | Franklin Growth vs. Growth Fund Of |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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