Correlation Between One Choice and Franklin Mutual

Can any of the company-specific risk be diversified away by investing in both One Choice 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 One Choice and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between One Choice Portfolio and Franklin Mutual Shares, you can compare the effects of market volatilities on One Choice 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 One Choice with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and Franklin Mutual.

Diversification Opportunities for One Choice and Franklin Mutual

0.79

Correlation Coefficient

One Choice  Franklin Mutual

Poor diversification

The 3 months correlation between One and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Portfolio and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and One Choice 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 One Choice Portfolio 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 Shares has no effect on the direction of One Choice i.e., One Choice and Franklin Mutual go up and down completely randomly.

Pair Corralation between One Choice and Franklin Mutual

Assuming the 90 days horizon One Choice is expected to generate 1.44 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, One Choice Portfolio is 1.21 times less risky than Franklin Mutual. It trades about 0.06 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,177  in Franklin Mutual Shares on September 12, 2024 and sell it today you would earn a total of  615.00  from holding Franklin Mutual Shares or generate 28.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

One Choice Portfolio  vs.  Franklin Mutual Shares

One Choice Portfolio

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Choice Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, One Choice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Mutual Shares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Shares are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with One Choice and Franklin Mutual

The main advantage of trading using opposite One Choice and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice 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.

The idea behind One Choice Portfolio and Franklin Mutual Shares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.