Correlation Between Balanced Fund and Franklin High
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Franklin High 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 Balanced Fund and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Franklin High Yield, you can compare the effects of market volatilities on Balanced Fund and Franklin High 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 Balanced Fund with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Franklin High.
Diversification Opportunities for Balanced Fund and Franklin High
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balanced and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Balanced Fund i.e., Balanced Fund and Franklin High go up and down completely randomly.
Pair Corralation between Balanced Fund and Franklin High
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 1.96 times more return on investment than Franklin High. However, Balanced Fund is 1.96 times more volatile than Franklin High Yield. It trades about 0.14 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.16 per unit of risk. If you would invest 1,681 in Balanced Fund Investor on September 15, 2024 and sell it today you would earn a total of 350.00 from holding Balanced Fund Investor or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Franklin High Yield
Performance |
| Timeline |
| Balanced Fund Investor |
| Franklin High Yield |
Balanced Fund and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Franklin High
The main advantage of trading using opposite Balanced Fund and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| Franklin High vs. Red Oak Technology | Franklin High vs. Leggmason Partners Institutional | Franklin High vs. Arrow Managed Futures | Franklin High vs. Balanced Fund Investor |
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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