Correlation Between Franklin Mutual and Mh Elite

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

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

Diversification Opportunities for Franklin Mutual and Mh Elite

0.69

Correlation Coefficient

Franklin Mutual  Mh Elite

Poor diversification

The 3 months correlation between Franklin and MHELX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Mh Elite Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mh Elite Small 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 Shares are associated (or correlated) with Mh Elite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mh Elite Small has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Mh Elite go up and down completely randomly.

Pair Corralation between Franklin Mutual and Mh Elite

Assuming the 90 days horizon Franklin Mutual Shares is expected to under-perform the Mh Elite. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Mutual Shares is 1.49 times less risky than Mh Elite. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Mh Elite Small is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  864.00  in Mh Elite Small on October 25, 2024 and sell it today you would lose (20.00) from holding Mh Elite Small or give up 2.31% of portfolio value over 90 days.

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

Franklin Mutual Shares  vs.  Mh Elite Small

Franklin Mutual Shares

Risk-Adjusted Performance

0 of 100

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 fairly strong technical indicators, Franklin Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mh Elite Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mh Elite Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Mh Elite 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 Mh Elite

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

The idea behind Franklin Mutual Shares and Mh Elite Small 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.