Correlation Between Franklin Mutual and Mfs Aggressive

Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Mfs Aggressive 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 Mfs Aggressive 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 Mfs Aggressive Growth, you can compare the effects of market volatilities on Franklin Mutual and Mfs Aggressive 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 Mfs Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Mfs Aggressive.

Diversification Opportunities for Franklin Mutual and Mfs Aggressive

0.9

Correlation Coefficient

Franklin Mutual  Mfs Aggressive

Almost no diversification

The 3 months correlation between Franklin and Mfs is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Mfs Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Aggressive Growth 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 Mfs Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Aggressive Growth has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Mfs Aggressive go up and down completely randomly.

Pair Corralation between Franklin Mutual and Mfs Aggressive

Assuming the 90 days horizon Franklin Mutual Shares is expected to under-perform the Mfs Aggressive. In addition to that, Franklin Mutual is 1.22 times more volatile than Mfs Aggressive Growth. It trades about -0.18 of its total potential returns per unit of risk. Mfs Aggressive Growth is currently generating about -0.09 per unit of volatility. If you would invest  3,172  in Mfs Aggressive Growth on November 29, 2024 and sell it today you would lose (140.00) from holding Mfs Aggressive Growth or give up 4.41% of portfolio value over 90 days.

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

Franklin Mutual Shares  vs.  Mfs Aggressive Growth

Franklin Mutual Shares

Risk-Adjusted Performance

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 latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mfs Aggressive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Mfs Aggressive 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 Mfs Aggressive

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

The idea behind Franklin Mutual Shares and Mfs Aggressive Growth 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..