Correlation Between Investec Global and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Investec Global and Franklin Mutual 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 Investec Global and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Franklin Mutual Global, you can compare the effects of market volatilities on Investec Global and Franklin Mutual 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 Investec Global with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Franklin Mutual.
Diversification Opportunities for Investec Global and Franklin Mutual
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investec and Franklin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Investec Global 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 Investec Global Franchise are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Investec Global i.e., Investec Global and Franklin Mutual go up and down completely randomly.
Pair Corralation between Investec Global and Franklin Mutual
Assuming the 90 days horizon Investec Global Franchise is expected to generate 0.96 times more return on investment than Franklin Mutual. However, Investec Global Franchise is 1.04 times less risky than Franklin Mutual. It trades about 0.11 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about -0.07 per unit of risk. If you would invest 1,776 in Investec Global Franchise on September 13, 2024 and sell it today you would earn a total of 43.00 from holding Investec Global Franchise or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Franklin Mutual Global
Performance |
| Timeline |
| Investec Global Franchise |
| Franklin Mutual Global |
Investec Global and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Franklin Mutual
The main advantage of trading using opposite Investec Global and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Investec Global vs. Investec Emerging Markets | Investec Global vs. Investec Global Franchise | Investec Global vs. Ninety One International | Investec Global vs. Vanguard 500 Index |
| Franklin Mutual vs. Ab Small Cap | Franklin Mutual vs. Cardinal Small Cap | Franklin Mutual vs. Pace Smallmedium Value | Franklin Mutual vs. Vy Columbia Small |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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