Correlation Between Franklin Mutual and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Thornburg International 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 Thornburg International 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 Thornburg International Value, you can compare the effects of market volatilities on Franklin Mutual and Thornburg International 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 Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Thornburg International.
Diversification Opportunities for Franklin Mutual and Thornburg International
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Thornburg is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International 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 Thornburg International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg International has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Thornburg International go up and down completely randomly.
Pair Corralation between Franklin Mutual and Thornburg International
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.28 times more return on investment than Thornburg International. However, Franklin Mutual Global is 3.53 times less risky than Thornburg International. It trades about 0.12 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.15 per unit of risk. If you would invest 3,144 in Franklin Mutual Global on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Franklin Mutual Global or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. Thornburg International Value
Performance |
| Timeline |
| Franklin Mutual Global |
| Thornburg International |
Franklin Mutual and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Thornburg International
The main advantage of trading using opposite Franklin Mutual and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Thornburg International 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 Thornburg International will offset losses from the drop in Thornburg International's long position.| Franklin Mutual vs. Ab Small Cap | Franklin Mutual vs. Cardinal Small Cap | Franklin Mutual vs. Pace Smallmedium Value | Franklin Mutual vs. Vy Columbia Small |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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