Correlation Between Franklin Natural and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Growth Fund 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 Natural and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Growth Fund Of, you can compare the effects of market volatilities on Franklin Natural and Growth Fund 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 Natural with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Growth Fund.
Diversification Opportunities for Franklin Natural and Growth Fund
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Growth is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Franklin Natural 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 Natural Resources are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Franklin Natural i.e., Franklin Natural and Growth Fund go up and down completely randomly.
Pair Corralation between Franklin Natural and Growth Fund
Assuming the 90 days horizon Franklin Natural Resources is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Natural Resources is 1.66 times less risky than Growth Fund. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Growth Fund Of is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,659 in Growth Fund Of on September 24, 2024 and sell it today you would lose (228.00) from holding Growth Fund Of or give up 2.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Natural Resources vs. Growth Fund Of
Performance |
Timeline |
Franklin Natural Res |
Growth Fund |
Franklin Natural and Growth Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Natural and Growth Fund
The main advantage of trading using opposite Franklin Natural and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.Franklin Natural vs. Franklin Mutual Beacon | Franklin Natural vs. Templeton Developing Markets | Franklin Natural vs. Franklin Mutual Global | Franklin Natural vs. Franklin Mutual Global |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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