Correlation Between Franklin Vertible and Aggressive Growth

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

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

Diversification Opportunities for Franklin Vertible and Aggressive Growth

0.81

Correlation Coefficient

Franklin Vertible  Aggressive Growth

Very poor diversification

The 3 months correlation between Franklin and Aggressive is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Aggressive Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth and Franklin Vertible 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 Vertible Securities are associated (or correlated) with Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Franklin Vertible i.e., Franklin Vertible and Aggressive Growth go up and down completely randomly.

Pair Corralation between Franklin Vertible and Aggressive Growth

Assuming the 90 days horizon Franklin Vertible Securities is expected to under-perform the Aggressive Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Vertible Securities is 2.33 times less risky than Aggressive Growth. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Aggressive Growth Portfolio is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  10,152  in Aggressive Growth Portfolio on September 26, 2024 and sell it today you would lose (353.00) from holding Aggressive Growth Portfolio or give up 3.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Franklin Vertible Securities  vs.  Aggressive Growth Portfolio

Franklin Vertible

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Vertible Securities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Vertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aggressive Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Aggressive Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Vertible and Aggressive Growth

The main advantage of trading using opposite Franklin Vertible and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Vertible position performs unexpectedly, Aggressive 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.

The idea behind Franklin Vertible Securities and Aggressive Growth Portfolio 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.