Correlation Between Franklin Mutual and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Growth 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 Growth 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 Growth Opportunities, you can compare the effects of market volatilities on Franklin Mutual and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Growth.
Diversification Opportunities for Franklin Mutual and Franklin Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Growth go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Growth
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.72 times more return on investment than Franklin Growth. However, Franklin Mutual Shares is 1.38 times less risky than Franklin Growth. It trades about 0.23 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.11 per unit of risk. If you would invest 2,723 in Franklin Mutual Shares on August 27, 2024 and sell it today you would earn a total of 119.00 from holding Franklin Mutual Shares or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Franklin Mutual Shares |
| Franklin Growth Oppo |
Franklin Mutual and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Franklin Growth
The main advantage of trading using opposite Franklin Mutual and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth'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 |
| Franklin Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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