Correlation Between Franklin Mutual and Franklin Balanced
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin 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 Franklin Balanced 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 Franklin Balanced Fund, you can compare the effects of market volatilities on Franklin Mutual and Franklin 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 Franklin Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Balanced.
Diversification Opportunities for Franklin Mutual and Franklin Balanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Quest and Franklin Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin 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 Quest are associated (or correlated) with Franklin Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balanced has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Balanced go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Balanced
Assuming the 90 days horizon Franklin Mutual Quest is expected to generate 2.0 times more return on investment than Franklin Balanced. However, Franklin Mutual is 2.0 times more volatile than Franklin Balanced Fund. It trades about 0.19 of its potential returns per unit of risk. Franklin Balanced Fund is currently generating about 0.15 per unit of risk. If you would invest 1,484 in Franklin Mutual Quest on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Franklin Mutual Quest or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Quest vs. Franklin Balanced Fund
Performance |
| Timeline |
| Franklin Mutual Quest |
| Franklin Balanced |
Franklin Mutual and Franklin Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Balanced
The main advantage of trading using opposite Franklin Mutual and Franklin Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin 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 Franklin Balanced will offset losses from the drop in Franklin Balanced's long position.| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Global |
| Franklin Balanced vs. Franklin Mutual Beacon | Franklin Balanced vs. Templeton Developing Markets | Franklin Balanced vs. Franklin Mutual Global | Franklin Balanced 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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