Correlation Between Nicholas Fund and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Nicholas Fund 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 Nicholas Fund and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicholas Fund Inc and Franklin Mutual European, you can compare the effects of market volatilities on Nicholas Fund 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 Nicholas Fund with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas Fund and Franklin Mutual.
Diversification Opportunities for Nicholas Fund and Franklin Mutual
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nicholas and Franklin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Fund Inc and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European and Nicholas 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 Nicholas Fund Inc 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 European has no effect on the direction of Nicholas Fund i.e., Nicholas Fund and Franklin Mutual go up and down completely randomly.
Pair Corralation between Nicholas Fund and Franklin Mutual
Assuming the 90 days horizon Nicholas Fund is expected to generate 1.52 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Nicholas Fund Inc is 1.06 times less risky than Franklin Mutual. It trades about 0.38 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 2,406 in Franklin Mutual European on November 2, 2024 and sell it today you would earn a total of 183.00 from holding Franklin Mutual European or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nicholas Fund Inc vs. Franklin Mutual European
Performance |
| Timeline |
| Nicholas Fund |
| Franklin Mutual European |
Nicholas Fund and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nicholas Fund and Franklin Mutual
The main advantage of trading using opposite Nicholas Fund and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicholas Fund 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.| Nicholas Fund vs. Federated Hermes Conservative | Nicholas Fund vs. Vy T Rowe | Nicholas Fund vs. Stone Ridge Diversified | Nicholas Fund vs. Valic Company I |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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