Correlation Between Franklin Mutual and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Strategic 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 Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Shares and Franklin Strategic Series, you can compare the effects of market volatilities on Franklin Mutual and Franklin Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Strategic.
Diversification Opportunities for Franklin Mutual and Franklin Strategic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Franklin Strategic Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Series 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 Shares are associated (or correlated) with Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Series has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Strategic go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Strategic
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 1.19 times more return on investment than Franklin Strategic. However, Franklin Mutual is 1.19 times more volatile than Franklin Strategic Series. It trades about 0.06 of its potential returns per unit of risk. Franklin Strategic Series is currently generating about 0.07 per unit of risk. If you would invest 2,319 in Franklin Mutual Shares on August 28, 2024 and sell it today you would earn a total of 576.00 from holding Franklin Mutual Shares or generate 24.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Franklin Strategic Series
Performance |
| Timeline |
| Franklin Mutual Shares |
| Franklin Strategic Series |
Franklin Mutual and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Strategic
The main advantage of trading using opposite Franklin Mutual and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.| Franklin Mutual vs. Templeton Growth Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Rising Dividends | Franklin Mutual vs. Franklin Growth Fund |
| Franklin Strategic vs. Franklin Mutual Beacon | Franklin Strategic vs. Templeton Developing Markets | Franklin Strategic vs. Franklin Mutual Global | Franklin Strategic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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