Correlation Between Qs Defensive and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Qs Defensive and Franklin Growth 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 Qs Defensive and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Defensive Growth and Franklin Growth Opportunities, you can compare the effects of market volatilities on Qs Defensive and Franklin Growth 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 Qs Defensive with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Defensive and Franklin Growth.
Diversification Opportunities for Qs Defensive and Franklin Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBCPX and Franklin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Qs Defensive Growth and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Qs Defensive 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 Qs Defensive Growth are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Qs Defensive i.e., Qs Defensive and Franklin Growth go up and down completely randomly.
Pair Corralation between Qs Defensive and Franklin Growth
Assuming the 90 days horizon Qs Defensive is expected to generate 3.29 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Qs Defensive Growth is 3.69 times less risky than Franklin Growth. It trades about 0.11 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,140 in Franklin Growth Opportunities on August 27, 2024 and sell it today you would earn a total of 147.00 from holding Franklin Growth Opportunities or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Defensive Growth vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Qs Defensive Growth |
| Franklin Growth Oppo |
Qs Defensive and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Defensive and Franklin Growth
The main advantage of trading using opposite Qs Defensive and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Defensive position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Qs Defensive vs. Franklin Mutual Beacon | Qs Defensive vs. Templeton Developing Markets | Qs Defensive vs. Franklin Mutual Global | Qs Defensive vs. Franklin Mutual Global |
| Franklin Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth vs. Franklin Mutual Global |
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 CEOs Directory module to screen CEOs from public companies around the world.
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