Correlation Between Franklin Mutual and Plumb Balanced
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Plumb Balanced 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 Plumb Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Plumb Balanced Fund, you can compare the effects of market volatilities on Franklin Mutual and Plumb Balanced 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 Plumb Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Plumb Balanced.
Diversification Opportunities for Franklin Mutual and Plumb Balanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Plumb is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Plumb Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced 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 Beacon are associated (or correlated) with Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Plumb Balanced go up and down completely randomly.
Pair Corralation between Franklin Mutual and Plumb Balanced
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.76 times less return on investment than Plumb Balanced. In addition to that, Franklin Mutual is 1.07 times more volatile than Plumb Balanced Fund. It trades about 0.07 of its total potential returns per unit of risk. Plumb Balanced Fund is currently generating about 0.14 per unit of volatility. If you would invest 3,302 in Plumb Balanced Fund on September 3, 2024 and sell it today you would earn a total of 813.00 from holding Plumb Balanced Fund or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Plumb Balanced Fund
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Plumb Balanced |
Franklin Mutual and Plumb Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Plumb Balanced
The main advantage of trading using opposite Franklin Mutual and Plumb Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Plumb Balanced 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 Plumb Balanced will offset losses from the drop in Plumb Balanced's long position.| Franklin Mutual vs. Prudential Government Money | Franklin Mutual vs. Dws Government Money | Franklin Mutual vs. Elfun Government Money | Franklin Mutual vs. Aig Government Money |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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