Correlation Between Franklin Mutual and Sound Mind
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Sound Mind 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 Sound Mind 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 Sound Mind Investing, you can compare the effects of market volatilities on Franklin Mutual and Sound Mind 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 Sound Mind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Sound Mind.
Diversification Opportunities for Franklin Mutual and Sound Mind
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Sound is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Sound Mind Investing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Mind Investing 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 Sound Mind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Mind Investing has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Sound Mind go up and down completely randomly.
Pair Corralation between Franklin Mutual and Sound Mind
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.87 times more return on investment than Sound Mind. However, Franklin Mutual Shares is 1.15 times less risky than Sound Mind. It trades about 0.32 of its potential returns per unit of risk. Sound Mind Investing is currently generating about 0.19 per unit of risk. If you would invest 2,762 in Franklin Mutual Shares on August 30, 2024 and sell it today you would earn a total of 168.00 from holding Franklin Mutual Shares or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Sound Mind Investing
Performance |
| Timeline |
| Franklin Mutual Shares |
| Sound Mind Investing |
Franklin Mutual and Sound Mind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Sound Mind
The main advantage of trading using opposite Franklin Mutual and Sound Mind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Sound Mind 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 Sound Mind will offset losses from the drop in Sound Mind's long position.| Franklin Mutual vs. American Funds Growth | Franklin Mutual vs. American Funds Growth | Franklin Mutual vs. Franklin Mutual Shares | Franklin Mutual vs. Franklin Mutual Shares |
| Sound Mind vs. Alger Health Sciences | Sound Mind vs. Baillie Gifford Health | Sound Mind vs. Allianzgi Health Sciences | Sound Mind vs. Delaware Healthcare 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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