Correlation Between Franklin Mutual and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Natural 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 Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual European and Franklin Natural Resources, you can compare the effects of market volatilities on Franklin Mutual and Franklin Natural 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 Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Natural.
Diversification Opportunities for Franklin Mutual and Franklin Natural
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual European and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res 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 European are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Natural go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Natural
Assuming the 90 days horizon Franklin Mutual European is expected to generate 0.69 times more return on investment than Franklin Natural. However, Franklin Mutual European is 1.45 times less risky than Franklin Natural. It trades about 0.05 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.03 per unit of risk. If you would invest 1,968 in Franklin Mutual European on August 30, 2024 and sell it today you would earn a total of 438.00 from holding Franklin Mutual European or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual European vs. Franklin Natural Resources
Performance |
| Timeline |
| Franklin Mutual European |
| Franklin Natural Res |
Franklin Mutual and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Natural
The main advantage of trading using opposite Franklin Mutual and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Natural 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 Franklin Natural will offset losses from the drop in Franklin Natural's long position.| Franklin Mutual vs. Ab Impact Municipal | Franklin Mutual vs. Versatile Bond Portfolio | Franklin Mutual vs. Bbh Intermediate Municipal | Franklin Mutual vs. Barings Active Short |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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