Correlation Between Sentinel Balanced and Franklin Growth

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

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

Diversification Opportunities for Sentinel Balanced and Franklin Growth

0.98

Correlation Coefficient

Sentinel Balanced  Franklin Growth

Almost no diversification

The 3 months correlation between Sentinel and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Sentinel Balanced Fund and Franklin Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Allo and Sentinel Balanced 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 Sentinel Balanced Fund are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Allo has no effect on the direction of Sentinel Balanced i.e., Sentinel Balanced and Franklin Growth go up and down completely randomly.

Pair Corralation between Sentinel Balanced and Franklin Growth

Assuming the 90 days horizon Sentinel Balanced is expected to generate 1.27 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Sentinel Balanced Fund is 1.2 times less risky than Franklin Growth. It trades about 0.06 of its potential returns per unit of risk. Franklin Growth Allocation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,013  in Franklin Growth Allocation on September 19, 2024 and sell it today you would earn a total of  40.00  from holding Franklin Growth Allocation or generate 1.99% return on investment over 90 days.

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

Sentinel Balanced Fund  vs.  Franklin Growth Allocation

Sentinel Balanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Balanced Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Sentinel Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Growth Allo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Growth Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Sentinel Balanced and Franklin Growth

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

The idea behind Sentinel Balanced Fund and Franklin Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.