Correlation Between Franklin High and Ab International

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

By analyzing existing cross correlation between Franklin High Yield and Ab International Value, you can compare the effects of market volatilities on Franklin High and Ab International 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 High with a short position of Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Ab International.

Diversification Opportunities for Franklin High and Ab International

0.48

Correlation Coefficient

Franklin High  Ab International

Very weak diversification

The 3 months correlation between Franklin and ABICX is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Ab International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Value and Franklin High 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 High Yield are associated (or correlated) with Ab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab International Value has no effect on the direction of Franklin High i.e., Franklin High and Ab International go up and down completely randomly.

Pair Corralation between Franklin High and Ab International

Assuming the 90 days horizon Franklin High Yield is expected to under-perform the Ab International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin High Yield is 3.26 times less risky than Ab International. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Ab International Value is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,371  in Ab International Value on December 27, 2024 and sell it today you would earn a total of  154.00  from holding Ab International Value or generate 11.23% return on investment over 90 days.

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

Franklin High Yield  vs.  Ab International Value

Franklin High Yield

Risk-Adjusted Performance

Weak

Over the last 90 days Franklin High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab International Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Value are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ab International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Franklin High and Ab International

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

The idea behind Franklin High Yield and Ab International Value 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.