Correlation Between Franklin Mutual and Swan Defined
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Swan Defined 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 Mutual and Swan Defined into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Shares and Swan Defined Risk, you can compare the effects of market volatilities on Franklin Mutual and Swan Defined 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 Mutual with a short position of Swan Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Swan Defined.
Diversification Opportunities for Franklin Mutual and Swan Defined
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Swan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Swan Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Defined Risk and Franklin Mutual 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 Mutual Shares are associated (or correlated) with Swan Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Defined Risk has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Swan Defined go up and down completely randomly.
Pair Corralation between Franklin Mutual and Swan Defined
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.93 times more return on investment than Swan Defined. However, Franklin Mutual Shares is 1.08 times less risky than Swan Defined. It trades about 0.06 of its potential returns per unit of risk. Swan Defined Risk is currently generating about 0.02 per unit of risk. If you would invest 2,348 in Franklin Mutual Shares on August 30, 2024 and sell it today you would earn a total of 582.00 from holding Franklin Mutual Shares or generate 24.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Swan Defined Risk
Performance |
| Timeline |
| Franklin Mutual Shares |
| Swan Defined Risk |
Franklin Mutual and Swan Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Swan Defined
The main advantage of trading using opposite Franklin Mutual and Swan Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Swan Defined 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 Swan Defined will offset losses from the drop in Swan Defined's long position.| Franklin Mutual vs. Franklin Income Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund | Franklin Mutual vs. Templeton Growth Fund |
| Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk | Swan Defined vs. Swan Defined Risk |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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