Correlation Between Mid Cap and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Franklin Utilities 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 Mid Cap and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value Profund and Franklin Utilities Fund, you can compare the effects of market volatilities on Mid Cap and Franklin Utilities 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 Mid Cap with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Franklin Utilities.
Diversification Opportunities for Mid Cap and Franklin Utilities
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mid and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Mid Cap 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 Mid Cap Value Profund are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Mid Cap i.e., Mid Cap and Franklin Utilities go up and down completely randomly.
Pair Corralation between Mid Cap and Franklin Utilities
Assuming the 90 days horizon Mid Cap Value Profund is expected to generate 1.0 times more return on investment than Franklin Utilities. However, Mid Cap Value Profund is 1.0 times less risky than Franklin Utilities. It trades about 0.18 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.08 per unit of risk. If you would invest 8,409 in Mid Cap Value Profund on September 12, 2024 and sell it today you would earn a total of 969.00 from holding Mid Cap Value Profund or generate 11.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mid Cap Value Profund vs. Franklin Utilities Fund
Performance |
Timeline |
Mid Cap Value |
Franklin Utilities |
Mid Cap and Franklin Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mid Cap and Franklin Utilities
The main advantage of trading using opposite Mid Cap and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.Mid Cap vs. Inverse Government Long | Mid Cap vs. Schwab Government Money | Mid Cap vs. Goldman Sachs Government | Mid Cap vs. Payden Government Fund |
Franklin Utilities vs. Pace Large Value | Franklin Utilities vs. Large Cap Growth Profund | Franklin Utilities vs. Transamerica Large Cap | Franklin Utilities vs. Touchstone Large Cap |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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