Correlation Between Semiconductor Ultrasector and Franklin Mutual

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

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

Diversification Opportunities for Semiconductor Ultrasector and Franklin Mutual

-0.46

Correlation Coefficient

Semiconductor Ultrasector  Franklin Mutual

Very good diversification

The 3 months correlation between Semiconductor and Franklin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon and Semiconductor Ultrasector 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 Semiconductor Ultrasector Profund 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 Beacon has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and Franklin Mutual go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and Franklin Mutual

Assuming the 90 days horizon Semiconductor Ultrasector Profund is expected to under-perform the Franklin Mutual. In addition to that, Semiconductor Ultrasector is 7.19 times more volatile than Franklin Mutual Beacon. It trades about -0.1 of its total potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.14 per unit of volatility. If you would invest  1,576  in Franklin Mutual Beacon on December 24, 2024 and sell it today you would earn a total of  96.00  from holding Franklin Mutual Beacon or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Semiconductor Ultrasector Prof  vs.  Franklin Mutual Beacon

Semiconductor Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Franklin Mutual Beacon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Beacon are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Franklin Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Ultrasector and Franklin Mutual

The main advantage of trading using opposite Semiconductor Ultrasector and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Ultrasector 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 Semiconductor Ultrasector Profund and Franklin Mutual Beacon 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.