Correlation Between Franklin Mutual and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Vanguard Lifestrategy 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 Vanguard Lifestrategy 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 Vanguard Lifestrategy Growth, you can compare the effects of market volatilities on Franklin Mutual and Vanguard Lifestrategy 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 Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Vanguard Lifestrategy.
Diversification Opportunities for Franklin Mutual and Vanguard Lifestrategy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Vanguard Lifestrategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy 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 Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between Franklin Mutual and Vanguard Lifestrategy
Assuming the 90 days horizon Franklin Mutual Shares is expected to under-perform the Vanguard Lifestrategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Mutual Shares is 1.0 times less risky than Vanguard Lifestrategy. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Vanguard Lifestrategy Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,514 in Vanguard Lifestrategy Growth on November 27, 2024 and sell it today you would earn a total of 27.00 from holding Vanguard Lifestrategy Growth or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Vanguard Lifestrategy Growth
Performance |
| Timeline |
| Franklin Mutual Shares |
| Vanguard Lifestrategy |
Franklin Mutual and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Vanguard Lifestrategy
The main advantage of trading using opposite Franklin Mutual and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Vanguard Lifestrategy 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 Vanguard Lifestrategy will offset losses from the drop in Vanguard Lifestrategy's long position.| Franklin Mutual vs. Franklin Mutual Quest | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Franklin Mutual European |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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