Correlation Between Ab Impact and Franklin Mutual

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Can any of the company-specific risk be diversified away by investing in both Ab Impact 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 Ab Impact and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Impact Municipal and Franklin Mutual Shares, you can compare the effects of market volatilities on Ab Impact 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 Ab Impact with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Franklin Mutual.

Diversification Opportunities for Ab Impact and Franklin Mutual

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ABIMX and Franklin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and Ab Impact 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 Ab Impact Municipal 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 Shares has no effect on the direction of Ab Impact i.e., Ab Impact and Franklin Mutual go up and down completely randomly.

Pair Corralation between Ab Impact and Franklin Mutual

Assuming the 90 days horizon Ab Impact Municipal is expected to generate 0.19 times more return on investment than Franklin Mutual. However, Ab Impact Municipal is 5.24 times less risky than Franklin Mutual. It trades about -0.35 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about -0.39 per unit of risk. If you would invest  1,001  in Ab Impact Municipal on October 6, 2024 and sell it today you would lose (23.00) from holding Ab Impact Municipal or give up 2.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ab Impact Municipal  vs.  Franklin Mutual Shares

 Performance 
       Timeline  
Ab Impact Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab Impact Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Ab Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Franklin Mutual Shares 

Risk-Adjusted Performance

0 of 100

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

Ab Impact and Franklin Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Impact and Franklin Mutual

The main advantage of trading using opposite Ab Impact and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact 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 Ab Impact Municipal and Franklin Mutual Shares 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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