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 Tax Free, 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
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Franklin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California 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 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 Tax 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 generate 1.71 times more return on investment than Franklin California. However, Franklin Mutual is 1.71 times more volatile than Franklin California Tax Free. It trades about 0.36 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.17 per unit of risk. If you would invest 1,675 in Franklin Mutual Beacon on September 1, 2024 and sell it today you would earn a total of 76.00 from holding Franklin Mutual Beacon or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin California Tax Free
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Franklin California Tax |
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. Aqr Risk Balanced Modities | Franklin Mutual vs. Strategic Allocation Aggressive | Franklin Mutual vs. Western Asset High | Franklin Mutual vs. Needham Aggressive Growth |
| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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