Correlation Between Franklin Growth and Sentinel Balanced

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

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

Diversification Opportunities for Franklin Growth and Sentinel Balanced

0.85

Correlation Coefficient

Franklin Growth  Sentinel Balanced

Very poor diversification

The 3 months correlation between Franklin and Sentinel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Allocation and Sentinel Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Balanced and Franklin Growth 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 Growth Allocation are associated (or correlated) with Sentinel Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Balanced has no effect on the direction of Franklin Growth i.e., Franklin Growth and Sentinel Balanced go up and down completely randomly.

Pair Corralation between Franklin Growth and Sentinel Balanced

Assuming the 90 days horizon Franklin Growth Allocation is not expected to generate positive returns. Moreover, Franklin Growth is 1.4 times more volatile than Sentinel Balanced Fund. It trades away all of its potential returns to assume current level of volatility. Sentinel Balanced Fund is currently generating about 0.08 per unit of risk. If you would invest  2,774  in Sentinel Balanced Fund on September 20, 2024 and sell it today you would earn a total of  56.00  from holding Sentinel Balanced Fund or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Franklin Growth Allocation  vs.  Sentinel Balanced Fund

Franklin Growth Allo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Growth Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sentinel Balanced

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Balanced Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Sentinel Balanced 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 Growth and Sentinel Balanced

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

The idea behind Franklin Growth Allocation and Sentinel Balanced Fund 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.