Correlation Between Franklin Growth and Pro-blend(r) Moderate
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate 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 Pro Blend Moderate Term, you can compare the effects of market volatilities on Franklin Growth and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Pro-blend(r) Moderate.
Diversification Opportunities for Franklin Growth and Pro-blend(r) Moderate
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Pro-blend(r) is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Moderate 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 Pro-blend(r) Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Moderate has no effect on the direction of Franklin Growth i.e., Franklin Growth and Pro-blend(r) Moderate go up and down completely randomly.
Pair Corralation between Franklin Growth and Pro-blend(r) Moderate
Assuming the 90 days horizon Franklin Growth Opportunities is expected to under-perform the Pro-blend(r) Moderate. In addition to that, Franklin Growth is 2.89 times more volatile than Pro Blend Moderate Term. It trades about -0.16 of its total potential returns per unit of risk. Pro Blend Moderate Term is currently generating about -0.06 per unit of volatility. If you would invest 1,475 in Pro Blend Moderate Term on December 3, 2024 and sell it today you would lose (29.00) from holding Pro Blend Moderate Term or give up 1.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Growth Opportunities vs. Pro Blend Moderate Term
Performance |
Timeline |
Franklin Growth Oppo |
Pro-blend(r) Moderate |
Franklin Growth and Pro-blend(r) Moderate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Growth and Pro-blend(r) Moderate
The main advantage of trading using opposite Franklin Growth and Pro-blend(r) Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Pro-blend(r) Moderate 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 Pro-blend(r) Moderate will offset losses from the drop in Pro-blend(r) Moderate's long position.Franklin Growth vs. Inverse Government Long | Franklin Growth vs. Franklin Adjustable Government | Franklin Growth vs. Federated Government Income | Franklin Growth vs. John Hancock Government |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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