Correlation Between Transamerica Intermediate and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate 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 Transamerica Intermediate and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Intermediate Muni and Franklin Growth Fund, you can compare the effects of market volatilities on Transamerica Intermediate 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 Transamerica Intermediate with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Franklin Growth.
Diversification Opportunities for Transamerica Intermediate and Franklin Growth
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Franklin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth and Transamerica Intermediate 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 Transamerica Intermediate Muni 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 has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Franklin Growth go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Franklin Growth
Assuming the 90 days horizon Transamerica Intermediate Muni is expected to generate 0.26 times more return on investment than Franklin Growth. However, Transamerica Intermediate Muni is 3.9 times less risky than Franklin Growth. It trades about 0.07 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.01 per unit of risk. If you would invest 1,065 in Transamerica Intermediate Muni on October 23, 2024 and sell it today you would earn a total of 3.00 from holding Transamerica Intermediate Muni or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Franklin Growth Fund
Performance |
| Timeline |
| Transamerica Intermediate |
| Franklin Growth |
Transamerica Intermediate and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Franklin Growth
The main advantage of trading using opposite Transamerica Intermediate and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate 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.| Transamerica Intermediate vs. Ab Large Cap | Transamerica Intermediate vs. Fidelity Large Cap | Transamerica Intermediate vs. Tiaa Cref Large Cap Value | Transamerica Intermediate vs. Tax Managed Large Cap |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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