Correlation Between Voya Global and Franklin Mutual

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

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

Diversification Opportunities for Voya Global and Franklin Mutual

0.77

Correlation Coefficient

Voya Global  Franklin Mutual

Poor diversification

The 3 months correlation between Voya and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Equity and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Voya 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 Voya Global Equity are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Voya Global i.e., Voya Global and Franklin Mutual go up and down completely randomly.

Pair Corralation between Voya Global and Franklin Mutual

Assuming the 90 days horizon Voya Global Equity is expected to generate 0.56 times more return on investment than Franklin Mutual. However, Voya Global Equity is 1.8 times less risky than Franklin Mutual. It trades about 0.02 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about -0.1 per unit of risk. If you would invest  4,262  in Voya Global Equity on October 24, 2024 and sell it today you would earn a total of  35.00  from holding Voya Global Equity or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.78%
Values	Daily Returns

Voya Global Equity  vs.  Franklin Mutual Global

Voya Global Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Voya Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Mutual Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Mutual Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Voya Global and Franklin Mutual

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

The idea behind Voya Global Equity and Franklin Mutual Global 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.