Correlation Between Franklin Mutual and Franklin Efolio
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Efolio 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 Efolio 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 Efolio Allocation, you can compare the effects of market volatilities on Franklin Mutual and Franklin Efolio 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 Efolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Efolio.
Diversification Opportunities for Franklin Mutual and Franklin Efolio
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin Efolio Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Efolio Allo 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 Efolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Efolio Allo has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Efolio go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Efolio
Assuming the 90 days horizon Franklin Mutual Beacon is expected to under-perform the Franklin Efolio. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Mutual Beacon is 1.31 times less risky than Franklin Efolio. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Franklin Efolio Allocation is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,455 in Franklin Efolio Allocation on September 13, 2024 and sell it today you would lose (8.00) from holding Franklin Efolio Allocation or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin Efolio Allocation
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Franklin Efolio Allo |
Franklin Mutual and Franklin Efolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Efolio
The main advantage of trading using opposite Franklin Mutual and Franklin Efolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Efolio 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 Efolio will offset losses from the drop in Franklin Efolio's long position.| Franklin Mutual vs. Alliancebernstein Global High | Franklin Mutual vs. Ab Global Risk | Franklin Mutual vs. Kinetics Global Fund | Franklin Mutual vs. Ab Global Real |
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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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