Correlation Between NYSE Composite and Franklin Mutual

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin Mutual Shares, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin Mutual.

Diversification Opportunities for NYSE Composite and Franklin Mutual

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between NYSE and FRANKLIN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Franklin Mutual go up and down completely randomly.
    Optimize

Pair Corralation between NYSE Composite and Franklin Mutual

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.42 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, NYSE Composite is 1.33 times less risky than Franklin Mutual. It trades about 0.29 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,768  in Franklin Mutual Shares on August 31, 2024 and sell it today you would earn a total of  162.00  from holding Franklin Mutual Shares or generate 5.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

NYSE Composite  vs.  Franklin Mutual Shares

 Performance 
       Timeline  

NYSE Composite and Franklin Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and Franklin Mutual

The main advantage of trading using opposite NYSE Composite and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.
The idea behind NYSE Composite and Franklin Mutual Shares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

Other Complementary Tools

AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Transaction History
View history of all your transactions and understand their impact on performance
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Stocks Directory
Find actively traded stocks across global markets