Correlation Between Franklin Mutual and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Eafe Fund 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 Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Global and The Eafe Fund, you can compare the effects of market volatilities on Franklin Mutual and Eafe Fund 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 Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Eafe Fund.
Diversification Opportunities for Franklin Mutual and Eafe Fund
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Eafe is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund 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 Global are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Eafe Fund go up and down completely randomly.
Pair Corralation between Franklin Mutual and Eafe Fund
Assuming the 90 days horizon Franklin Mutual Global is expected to under-perform the Eafe Fund. In addition to that, Franklin Mutual is 1.0 times more volatile than The Eafe Fund. It trades about -0.32 of its total potential returns per unit of risk. The Eafe Fund is currently generating about -0.3 per unit of volatility. If you would invest 1,421 in The Eafe Fund on October 7, 2024 and sell it today you would lose (172.00) from holding The Eafe Fund or give up 12.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. The Eafe Fund
Performance |
| Timeline |
| Franklin Mutual Global |
| Eafe Fund |
Franklin Mutual and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Eafe Fund
The main advantage of trading using opposite Franklin Mutual and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Dodge Global Stock | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. T Rowe Price |
| Eafe Fund vs. Vanguard Financials Index | Eafe Fund vs. Putnam Global Financials | Eafe Fund vs. Davis Financial Fund | Eafe Fund vs. Gabelli Global Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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