Correlation Between Franklin Mutual and Franklin Balance
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Franklin Balance 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 Mutual and Franklin Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Franklin Balance Sheet, you can compare the effects of market volatilities on Franklin Mutual and Franklin Balance 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 Mutual with a short position of Franklin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Franklin Balance.
Diversification Opportunities for Franklin Mutual and Franklin Balance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Franklin Balance Sheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balance Sheet and Franklin Mutual 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 Mutual Beacon are associated (or correlated) with Franklin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balance Sheet has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Franklin Balance go up and down completely randomly.
Pair Corralation between Franklin Mutual and Franklin Balance
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.92 times less return on investment than Franklin Balance. But when comparing it to its historical volatility, Franklin Mutual Beacon is 1.37 times less risky than Franklin Balance. It trades about 0.1 of its potential returns per unit of risk. Franklin Balance Sheet is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,677 in Franklin Balance Sheet on September 7, 2024 and sell it today you would earn a total of 261.00 from holding Franklin Balance Sheet or generate 7.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.44% |
Values | Daily Returns |
Franklin Mutual Beacon vs. Franklin Balance Sheet
Performance |
Timeline |
Franklin Mutual Beacon |
Franklin Balance Sheet |
Franklin Mutual and Franklin Balance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Mutual and Franklin Balance
The main advantage of trading using opposite Franklin Mutual and Franklin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Franklin Balance 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 Balance will offset losses from the drop in Franklin Balance's long position.Franklin Mutual vs. Short Precious Metals | Franklin Mutual vs. Europac Gold Fund | Franklin Mutual vs. Gold And Precious | Franklin Mutual vs. Sprott Gold Equity |
Franklin Balance vs. Delaware Limited Term Diversified | Franklin Balance vs. Tiaa Cref Small Cap Equity | Franklin Balance vs. Pgim Jennison Diversified | Franklin Balance vs. Adams Diversified Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |