Correlation Between Mirova Global and Franklin High

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

By analyzing existing cross correlation between Mirova Global Green and Franklin High Income, you can compare the effects of market volatilities on Mirova Global and Franklin High 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 Mirova Global with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirova Global and Franklin High.

Diversification Opportunities for Mirova Global and Franklin High

0.49

Correlation Coefficient

Mirova Global  Franklin High

Very weak diversification

The 3 months correlation between Mirova and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mirova Global Green and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Mirova Global 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 Mirova Global Green are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of Mirova Global i.e., Mirova Global and Franklin High go up and down completely randomly.

Pair Corralation between Mirova Global and Franklin High

Assuming the 90 days horizon Mirova Global is expected to generate 1.73 times less return on investment than Franklin High. But when comparing it to its historical volatility, Mirova Global Green is 1.05 times less risky than Franklin High. It trades about 0.07 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Franklin High Income on September 24, 2024 and sell it today you would earn a total of  31.00  from holding Franklin High Income or generate 21.53% return on investment over 90 days.

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

Mirova Global Green  vs.  Franklin High Income

Mirova Global Green

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin High Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mirova Global and Franklin High

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

The idea behind Mirova Global Green and Franklin High Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.