Correlation Between Franklin Mutual and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual 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 Franklin Mutual and Franklin Convertible 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 Vertible Securities, you can compare the effects of market volatilities on Franklin Mutual 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 Franklin Mutual with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Convertible.
Diversification Opportunities for Franklin Mutual and Franklin Convertible
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible 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 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 Franklin Mutual i.e., Franklin Mutual and Franklin Convertible go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Convertible
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.02 times less return on investment than Franklin Convertible. In addition to that, Franklin Mutual is 1.3 times more volatile than Franklin Vertible Securities. It trades about 0.04 of its total potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.06 per unit of volatility. If you would invest 2,062 in Franklin Vertible Securities on September 2, 2024 and sell it today you would earn a total of 401.00 from holding Franklin Vertible Securities or generate 19.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin Vertible Securities
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Franklin Convertible |
Franklin Mutual and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Convertible
The main advantage of trading using opposite Franklin Mutual and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual 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.| Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund |
| Franklin Convertible vs. Franklin Mutual Beacon | Franklin Convertible vs. Templeton Developing Markets | Franklin Convertible vs. Franklin Mutual Global | Franklin Convertible 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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