Correlation Between Franklin Mutual and Blue Current
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Blue Current 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 Blue Current 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 Blue Current Global, you can compare the effects of market volatilities on Franklin Mutual and Blue Current 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 Blue Current. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Blue Current.
Diversification Opportunities for Franklin Mutual and Blue Current
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Blue is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Blue Current Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Current Global 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 Blue Current. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Current Global has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Blue Current go up and down completely randomly.
Pair Corralation between Franklin Mutual and Blue Current
Assuming the 90 days horizon Franklin Mutual Global is expected to under-perform the Blue Current. In addition to that, Franklin Mutual is 1.11 times more volatile than Blue Current Global. It trades about -0.04 of its total potential returns per unit of risk. Blue Current Global is currently generating about -0.03 per unit of volatility. If you would invest 1,630 in Blue Current Global on August 29, 2024 and sell it today you would lose (13.00) from holding Blue Current Global or give up 0.8% 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. Blue Current Global
Performance |
| Timeline |
| Franklin Mutual Global |
| Blue Current Global |
Franklin Mutual and Blue Current Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Blue Current
The main advantage of trading using opposite Franklin Mutual and Blue Current positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Blue Current 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 Blue Current will offset losses from the drop in Blue Current's long position.The idea behind Franklin Mutual Global and Blue Current Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Blue Current vs. Franklin Mutual Global | Blue Current vs. Franklin Mutual Global | Blue Current vs. Franklin Mutual Global |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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