Correlation Between Franklin Mutual and Pro-blend(r) Maximum
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Pro-blend(r) Maximum 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 Pro-blend(r) Maximum 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 Pro Blend Maximum Term, you can compare the effects of market volatilities on Franklin Mutual and Pro-blend(r) Maximum 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 Pro-blend(r) Maximum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Pro-blend(r) Maximum.
Diversification Opportunities for Franklin Mutual and Pro-blend(r) Maximum
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Pro-blend(r) is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Maximum 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 Pro-blend(r) Maximum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Maximum has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Pro-blend(r) Maximum go up and down completely randomly.
Pair Corralation between Franklin Mutual and Pro-blend(r) Maximum
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.9 times more return on investment than Pro-blend(r) Maximum. However, Franklin Mutual Shares is 1.11 times less risky than Pro-blend(r) Maximum. It trades about -0.06 of its potential returns per unit of risk. Pro Blend Maximum Term is currently generating about -0.13 per unit of risk. If you would invest 2,567 in Franklin Mutual Shares on November 28, 2024 and sell it today you would lose (19.00) from holding Franklin Mutual Shares or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Pro Blend Maximum Term
Performance |
| Timeline |
| Franklin Mutual Shares |
| Pro-blend(r) Maximum |
Franklin Mutual and Pro-blend(r) Maximum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Pro-blend(r) Maximum
The main advantage of trading using opposite Franklin Mutual and Pro-blend(r) Maximum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Pro-blend(r) Maximum 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 Pro-blend(r) Maximum will offset losses from the drop in Pro-blend(r) Maximum's long position.| Franklin Mutual vs. Franklin Income Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund | Franklin Mutual vs. Templeton Growth Fund |
| Pro-blend(r) Maximum vs. Pro Blend Extended Term | Pro-blend(r) Maximum vs. Pro Blend Moderate Term | Pro-blend(r) Maximum vs. Pro Blend Servative Term | Pro-blend(r) Maximum vs. Large Cap Fund |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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