Correlation Between Invesco Energy and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Invesco Energy 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 Invesco Energy and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Energy Fund and Franklin Mutual Shares, you can compare the effects of market volatilities on Invesco Energy 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 Invesco Energy with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Franklin Mutual.
Diversification Opportunities for Invesco Energy and Franklin Mutual
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and Invesco Energy 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 Invesco Energy Fund 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 Shares has no effect on the direction of Invesco Energy i.e., Invesco Energy and Franklin Mutual go up and down completely randomly.
Pair Corralation between Invesco Energy and Franklin Mutual
Assuming the 90 days horizon Invesco Energy is expected to generate 1.2 times less return on investment than Franklin Mutual. In addition to that, Invesco Energy is 1.45 times more volatile than Franklin Mutual Shares. It trades about 0.06 of its total potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.11 per unit of volatility. If you would invest 2,400 in Franklin Mutual Shares on September 4, 2024 and sell it today you would earn a total of 506.00 from holding Franklin Mutual Shares or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Franklin Mutual Shares
Performance |
| Timeline |
| Invesco Energy |
| Franklin Mutual Shares |
Invesco Energy and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Franklin Mutual
The main advantage of trading using opposite Invesco Energy and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy 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.| Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Oppenheimer Rising Dividends |
| Franklin Mutual vs. Invesco Energy Fund | Franklin Mutual vs. Energy Basic Materials | Franklin Mutual vs. Firsthand Alternative Energy | Franklin Mutual vs. Icon Natural Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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