Correlation Between Franklin Mutual and Franklin California
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin California 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 Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Franklin California High, you can compare the effects of market volatilities on Franklin Mutual and Franklin California 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 Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin California.
Diversification Opportunities for Franklin Mutual and Franklin California
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High 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 Beacon are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin California go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin California
Assuming the 90 days horizon Franklin Mutual Beacon is expected to under-perform the Franklin California. In addition to that, Franklin Mutual is 2.78 times more volatile than Franklin California High. It trades about -0.02 of its total potential returns per unit of risk. Franklin California High is currently generating about -0.02 per unit of volatility. If you would invest 987.00 in Franklin California High on November 2, 2024 and sell it today you would lose (3.00) from holding Franklin California High or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin California High
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Franklin California High |
Franklin Mutual and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin California
The main advantage of trading using opposite Franklin Mutual and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Franklin Mutual vs. Old Westbury California | Franklin Mutual vs. Intermediate Term Tax Free Bond | Franklin Mutual vs. Legg Mason Partners | Franklin Mutual vs. Federated Government Income |
| Franklin California vs. Copeland Risk Managed | Franklin California vs. Riskproreg Pfg 0 15 | Franklin California vs. Gugg Actv Invmt | Franklin California vs. Intal High Relative |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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