Correlation Between Blackrock Glbl and Franklin Mutual

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

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

Diversification Opportunities for Blackrock Glbl and Franklin Mutual

0.5

Correlation Coefficient

Blackrock Glbl  Franklin Mutual

Very weak diversification

The 3 months correlation between Blackrock and Franklin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Glbl Sm and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European and Blackrock Glbl 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 Blackrock Glbl Sm 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 European has no effect on the direction of Blackrock Glbl i.e., Blackrock Glbl and Franklin Mutual go up and down completely randomly.

Pair Corralation between Blackrock Glbl and Franklin Mutual

Assuming the 90 days horizon Blackrock Glbl Sm is expected to under-perform the Franklin Mutual. In addition to that, Blackrock Glbl is 2.21 times more volatile than Franklin Mutual European. It trades about -0.1 of its total potential returns per unit of risk. Franklin Mutual European is currently generating about -0.18 per unit of volatility. If you would invest  2,632  in Franklin Mutual European on September 28, 2024 and sell it today you would lose (220.00) from holding Franklin Mutual European or give up 8.36% of portfolio value over 90 days.

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

Blackrock Glbl Sm  vs.  Franklin Mutual European

Blackrock Glbl Sm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Glbl Sm has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Franklin Mutual European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Mutual European has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Blackrock Glbl and Franklin Mutual

The main advantage of trading using opposite Blackrock Glbl and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Glbl 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 Blackrock Glbl Sm and Franklin Mutual European 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.