Correlation Between Franklin Mutual and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Federal 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 Federal 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 Federal Tax Free, you can compare the effects of market volatilities on Franklin Mutual and Franklin Federal 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 Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Federal.
Diversification Opportunities for Franklin Mutual and Franklin Federal
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Franklin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax 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 Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Federal go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Federal
Assuming the 90 days horizon Franklin Mutual Beacon is expected to generate 2.83 times more return on investment than Franklin Federal. However, Franklin Mutual is 2.83 times more volatile than Franklin Federal Tax Free. It trades about 0.04 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.06 per unit of risk. If you would invest 1,508 in Franklin Mutual Beacon on August 27, 2024 and sell it today you would earn a total of 224.00 from holding Franklin Mutual Beacon or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Franklin Federal Tax |
Franklin Mutual and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Federal
The main advantage of trading using opposite Franklin Mutual and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Franklin Mutual vs. Scharf Fund Retail | Franklin Mutual vs. Ms Global Fixed | Franklin Mutual vs. Dodge International Stock | Franklin Mutual vs. Ab Select Equity |
| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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