Correlation Between Franklin Mutual and Brandywineglobal
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Brandywineglobal 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 Brandywineglobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Quest and Brandywineglobal High, you can compare the effects of market volatilities on Franklin Mutual and Brandywineglobal 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 Brandywineglobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Brandywineglobal.
Diversification Opportunities for Franklin Mutual and Brandywineglobal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Brandywineglobal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Quest and Brandywineglobal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywineglobal High 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 Quest are associated (or correlated) with Brandywineglobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywineglobal High has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Brandywineglobal go up and down completely randomly.
Pair Corralation between Franklin Mutual and Brandywineglobal
Assuming the 90 days horizon Franklin Mutual Quest is expected to generate 3.78 times more return on investment than Brandywineglobal. However, Franklin Mutual is 3.78 times more volatile than Brandywineglobal High. It trades about -0.05 of its potential returns per unit of risk. Brandywineglobal High is currently generating about -0.25 per unit of risk. If you would invest 1,462 in Franklin Mutual Quest on December 13, 2024 and sell it today you would lose (8.00) from holding Franklin Mutual Quest or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Quest vs. Brandywineglobal High
Performance |
| Timeline |
| Franklin Mutual Quest |
| Brandywineglobal High |
Franklin Mutual and Brandywineglobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Brandywineglobal
The main advantage of trading using opposite Franklin Mutual and Brandywineglobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Brandywineglobal 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 Brandywineglobal will offset losses from the drop in Brandywineglobal's long position.| Franklin Mutual vs. Old Westbury 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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