Correlation Between Ftfa Franklin and American Funds
Can any of the company-specific risk be diversified away by investing in both Ftfa Franklin and American Funds 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 Ftfa Franklin and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ftfa Franklin Templeton Growth and American Funds 2045, you can compare the effects of market volatilities on Ftfa Franklin and American Funds 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 Ftfa Franklin with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ftfa Franklin and American Funds.
Diversification Opportunities for Ftfa Franklin and American Funds
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ftfa and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ftfa Franklin Templeton Growth and American Funds 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2045 and Ftfa Franklin 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 Ftfa Franklin Templeton Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2045 has no effect on the direction of Ftfa Franklin i.e., Ftfa Franklin and American Funds go up and down completely randomly.
Pair Corralation between Ftfa Franklin and American Funds
Assuming the 90 days horizon Ftfa Franklin is expected to generate 1.55 times less return on investment than American Funds. But when comparing it to its historical volatility, Ftfa Franklin Templeton Growth is 1.11 times less risky than American Funds. It trades about 0.27 of its potential returns per unit of risk. American Funds 2045 is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,178 in American Funds 2045 on September 17, 2024 and sell it today you would earn a total of 62.00 from holding American Funds 2045 or generate 2.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ftfa Franklin Templeton Growth vs. American Funds 2045
Performance |
Timeline |
Ftfa Franklin Templeton |
American Funds 2045 |
Ftfa Franklin and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ftfa Franklin and American Funds
The main advantage of trading using opposite Ftfa Franklin and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ftfa Franklin position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Ftfa Franklin vs. Franklin Small Cap | Ftfa Franklin vs. Df Dent Small | Ftfa Franklin vs. Pace Smallmedium Value | Ftfa Franklin vs. Guidemark Smallmid Cap |
American Funds vs. Qs Defensive Growth | American Funds vs. Ftfa Franklin Templeton Growth | American Funds vs. Rational Defensive Growth | American Funds vs. Champlain Mid 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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