Correlation Between Franklin Growth and Franklin Efolio

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

By analyzing existing cross correlation between Franklin Growth Opportunities and Franklin Efolio Allocation, you can compare the effects of market volatilities on Franklin Growth and Franklin Efolio 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 Franklin Efolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Franklin Efolio.

Diversification Opportunities for Franklin Growth and Franklin Efolio

0.92

Correlation Coefficient

Franklin Growth  Franklin Efolio

Almost no diversification

The 3 months correlation between Franklin and Franklin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Franklin Efolio Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Efolio Allo 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 Opportunities are associated (or correlated) with Franklin Efolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Efolio Allo has no effect on the direction of Franklin Growth i.e., Franklin Growth and Franklin Efolio go up and down completely randomly.

Pair Corralation between Franklin Growth and Franklin Efolio

Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 1.4 times more return on investment than Franklin Efolio. However, Franklin Growth is 1.4 times more volatile than Franklin Efolio Allocation. It trades about 0.13 of its potential returns per unit of risk. Franklin Efolio Allocation is currently generating about 0.12 per unit of risk. If you would invest  3,577  in Franklin Growth Opportunities on September 13, 2024 and sell it today you would earn a total of  275.00  from holding Franklin Growth Opportunities or generate 7.69% return on investment over 90 days.

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

Franklin Growth Opportunities  vs.  Franklin Efolio Allocation

Franklin Growth Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Growth Opportunities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Franklin Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin Efolio Allo

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Efolio Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Franklin Efolio 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 Franklin Efolio

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

The idea behind Franklin Growth Opportunities and Franklin Efolio Allocation 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.