Correlation Between Franklin Mutual and Amg River

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

By analyzing existing cross correlation between Franklin Mutual European and Amg River Road, you can compare the effects of market volatilities on Franklin Mutual and Amg River 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 Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Amg River.

Diversification Opportunities for Franklin Mutual and Amg River

0.12

Correlation Coefficient

Franklin Mutual  Amg River

Average diversification

The 3 months correlation between Franklin and Amg is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual European and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road 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 European are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Amg River go up and down completely randomly.

Pair Corralation between Franklin Mutual and Amg River

Assuming the 90 days horizon Franklin Mutual European is expected to generate 0.76 times more return on investment than Amg River. However, Franklin Mutual European is 1.32 times less risky than Amg River. It trades about 0.03 of its potential returns per unit of risk. Amg River Road is currently generating about 0.02 per unit of risk. If you would invest  2,151  in Franklin Mutual European on October 4, 2024 and sell it today you would earn a total of  260.00  from holding Franklin Mutual European or generate 12.09% return on investment over 90 days.

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

Franklin Mutual European  vs.  Amg River Road

Franklin Mutual European

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amg River Road

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Franklin Mutual and Amg River

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

The idea behind Franklin Mutual European and Amg River Road 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.