Correlation Between Franklin Mutual and Mutual Quest
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Mutual Quest 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 Mutual Quest 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 Mutual Quest, you can compare the effects of market volatilities on Franklin Mutual and Mutual Quest 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 Mutual Quest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Mutual Quest.
Diversification Opportunities for Franklin Mutual and Mutual Quest
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Mutual is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Mutual Quest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Quest 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 Mutual Quest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Quest has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Mutual Quest go up and down completely randomly.
Pair Corralation between Franklin Mutual and Mutual Quest
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 1.3 times more return on investment than Mutual Quest. However, Franklin Mutual is 1.3 times more volatile than Mutual Quest. It trades about 0.15 of its potential returns per unit of risk. Mutual Quest is currently generating about 0.06 per unit of risk. If you would invest 2,698 in Franklin Mutual Shares on August 29, 2024 and sell it today you would earn a total of 185.00 from holding Franklin Mutual Shares or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Mutual Quest
Performance |
| Timeline |
| Franklin Mutual Shares |
| Mutual Quest |
Franklin Mutual and Mutual Quest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Mutual Quest
The main advantage of trading using opposite Franklin Mutual and Mutual Quest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Mutual Quest 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 Mutual Quest will offset losses from the drop in Mutual Quest's long position.| Franklin Mutual vs. Templeton Growth Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Income Fund | Franklin Mutual vs. Franklin Rising Dividends |
| Mutual Quest vs. Us Government Plus | Mutual Quest vs. Us Government Securities | Mutual Quest vs. Government Securities Fund | Mutual Quest vs. Us Government Securities |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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