Correlation Between Franklin Mutual and Barloworld
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Barloworld 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 Barloworld 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 Barloworld Ltd ADR, you can compare the effects of market volatilities on Franklin Mutual and Barloworld 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 Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Barloworld.
Diversification Opportunities for Franklin Mutual and Barloworld
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Barloworld is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR 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 Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Barloworld go up and down completely randomly.
Pair Corralation between Franklin Mutual and Barloworld
Assuming the 90 days horizon Franklin Mutual is expected to generate 7.57 times less return on investment than Barloworld. But when comparing it to its historical volatility, Franklin Mutual Global is 9.94 times less risky than Barloworld. It trades about 0.04 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 581.00 in Barloworld Ltd ADR on August 24, 2024 and sell it today you would lose (158.00) from holding Barloworld Ltd ADR or give up 27.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.37% |
| Values | Daily Returns |
Franklin Mutual Global vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Franklin Mutual Global |
| Barloworld ADR |
Franklin Mutual and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Barloworld
The main advantage of trading using opposite Franklin Mutual and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| Franklin Mutual vs. Vanguard Global Credit | Franklin Mutual vs. Morgan Stanley Global | Franklin Mutual vs. Rbb Fund Trust | Franklin Mutual vs. Nuveen Global Real |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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