Correlation Between Royce Opportunity and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Royce Opportunity and Franklin Convertible 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 Royce Opportunity and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Opportunity Fund and Franklin Vertible Securities, you can compare the effects of market volatilities on Royce Opportunity and Franklin Convertible 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 Royce Opportunity with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Franklin Convertible.
Diversification Opportunities for Royce Opportunity and Franklin Convertible
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royce and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and Royce Opportunity 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 Royce Opportunity Fund are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Franklin Convertible go up and down completely randomly.
Pair Corralation between Royce Opportunity and Franklin Convertible
Assuming the 90 days horizon Royce Opportunity Fund is expected to generate 2.14 times more return on investment than Franklin Convertible. However, Royce Opportunity is 2.14 times more volatile than Franklin Vertible Securities. It trades about 0.04 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.06 per unit of risk. If you would invest 1,298 in Royce Opportunity Fund on September 1, 2024 and sell it today you would earn a total of 297.00 from holding Royce Opportunity Fund or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Royce Opportunity Fund vs. Franklin Vertible Securities
Performance |
| Timeline |
| Royce Opportunity |
| Franklin Convertible |
Royce Opportunity and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Opportunity and Franklin Convertible
The main advantage of trading using opposite Royce Opportunity and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Opportunity position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| Royce Opportunity vs. Clearbridge Value Trust | Royce Opportunity vs. T Rowe Price | Royce Opportunity vs. Clearbridge International Growth | Royce Opportunity vs. Davis Financial Fund |
| Franklin Convertible vs. Palm Valley Capital | Franklin Convertible vs. Royce Opportunity Fund | Franklin Convertible vs. Heartland Value Plus | Franklin Convertible vs. Boston Partners Small |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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