Correlation Between Franklin Growth and Loomis Sayles

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

By analyzing existing cross correlation between Franklin Growth Opportunities and Loomis Sayles Senior, you can compare the effects of market volatilities on Franklin Growth and Loomis Sayles 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 Growth with a short position of Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Loomis Sayles.

Diversification Opportunities for Franklin Growth and Loomis Sayles

0.55

Correlation Coefficient

Franklin Growth  Loomis Sayles

Very weak diversification

The 3 months correlation between Franklin and Loomis is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Loomis Sayles Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Senior and Franklin Growth 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 Growth Opportunities are associated (or correlated) with Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Senior has no effect on the direction of Franklin Growth i.e., Franklin Growth and Loomis Sayles go up and down completely randomly.

Pair Corralation between Franklin Growth and Loomis Sayles

Assuming the 90 days horizon Franklin Growth Opportunities is expected to under-perform the Loomis Sayles. In addition to that, Franklin Growth is 9.74 times more volatile than Loomis Sayles Senior. It trades about -0.05 of its total potential returns per unit of risk. Loomis Sayles Senior is currently generating about 0.07 per unit of volatility. If you would invest  816.00  in Loomis Sayles Senior on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Loomis Sayles Senior or generate 0.61% return on investment over 90 days.

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

Franklin Growth Opportunities  vs.  Loomis Sayles Senior

Franklin Growth Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Loomis Sayles Senior

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Senior are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Loomis Sayles 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 Growth and Loomis Sayles

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

The idea behind Franklin Growth Opportunities and Loomis Sayles Senior 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.