Correlation Between Franklin Mutual and Gotham Defensive
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Gotham Defensive 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 Gotham Defensive 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 Gotham Defensive Long, you can compare the effects of market volatilities on Franklin Mutual and Gotham Defensive 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 Gotham Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Gotham Defensive.
Diversification Opportunities for Franklin Mutual and Gotham Defensive
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Gotham is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Gotham Defensive Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Defensive Long 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 Gotham Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Defensive Long has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Gotham Defensive go up and down completely randomly.
Pair Corralation between Franklin Mutual and Gotham Defensive
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.66 times more return on investment than Gotham Defensive. However, Franklin Mutual Global is 1.51 times less risky than Gotham Defensive. It trades about -0.04 of its potential returns per unit of risk. Gotham Defensive Long is currently generating about -0.14 per unit of risk. If you would invest 3,187 in Franklin Mutual Global on September 12, 2024 and sell it today you would lose (15.00) from holding Franklin Mutual Global or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Mutual Global vs. Gotham Defensive Long
Performance |
| Timeline |
| Franklin Mutual Global |
| Gotham Defensive Long |
Franklin Mutual and Gotham Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Gotham Defensive
The main advantage of trading using opposite Franklin Mutual and Gotham Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Gotham Defensive 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 Gotham Defensive will offset losses from the drop in Gotham Defensive's long position.| Franklin Mutual vs. Qs Large Cap | Franklin Mutual vs. American Mutual Fund | Franklin Mutual vs. Virtus Nfj Large Cap | Franklin Mutual vs. Avantis Large Cap |
| Gotham Defensive vs. Ab Small Cap | Gotham Defensive vs. Lord Abbett Small | Gotham Defensive vs. Omni Small Cap Value | Gotham Defensive vs. Valic Company I |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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