Correlation Between Franklin Mutual and American Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Global and American Funds American, you can compare the effects of market volatilities on Franklin Mutual and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and American Funds.
Diversification Opportunities for Franklin Mutual and American Funds
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and American is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and American Funds American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds American 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 Global are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds American has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and American Funds go up and down completely randomly.
Pair Corralation between Franklin Mutual and American Funds
Assuming the 90 days horizon Franklin Mutual Global is expected to under-perform the American Funds. In addition to that, Franklin Mutual is 8.52 times more volatile than American Funds American. It trades about -0.2 of its total potential returns per unit of risk. American Funds American is currently generating about 0.03 per unit of volatility. If you would invest 975.00 in American Funds American on September 23, 2024 and sell it today you would earn a total of 2.00 from holding American Funds American or generate 0.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Mutual Global vs. American Funds American
Performance |
Timeline |
Franklin Mutual Global |
American Funds American |
Franklin Mutual and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Mutual and American Funds
The main advantage of trading using opposite Franklin Mutual and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Franklin Mutual vs. Blackrock Science Technology | Franklin Mutual vs. Technology Ultrasector Profund | Franklin Mutual vs. Science Technology Fund | Franklin Mutual vs. Vanguard Information Technology |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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