Correlation Between Franklin High and International Equity
Can any of the company-specific risk be diversified away by investing in both Franklin High and International Equity 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 International Equity 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 International Equity Fund, you can compare the effects of market volatilities on Franklin High and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and International Equity.
Diversification Opportunities for Franklin High and International Equity
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and International is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Franklin High i.e., Franklin High and International Equity go up and down completely randomly.
Pair Corralation between Franklin High and International Equity
Assuming the 90 days horizon Franklin High Yield is expected to generate 0.3 times more return on investment than International Equity. However, Franklin High Yield is 3.31 times less risky than International Equity. It trades about 0.07 of its potential returns per unit of risk. International Equity Fund is currently generating about -0.01 per unit of risk. If you would invest 869.00 in Franklin High Yield on September 25, 2024 and sell it today you would earn a total of 41.00 from holding Franklin High Yield or generate 4.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin High Yield vs. International Equity Fund
Performance |
Timeline |
Franklin High Yield |
International Equity |
Franklin High and International Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin High and International Equity
The main advantage of trading using opposite Franklin High and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.Franklin High vs. Delaware Limited Term Diversified | Franklin High vs. Elfun Diversified Fund | Franklin High vs. Western Asset Diversified | Franklin High vs. Prudential Core Conservative |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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