Correlation Between Franklin Mutual and Harbor Convertible

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

Diversification Opportunities for Franklin Mutual and Harbor Convertible

-0.17

Correlation Coefficient

Franklin Mutual  Harbor Convertible

Good diversification

The 3 months correlation between Franklin and Harbor is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Harbor Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Vertible Secu 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 Harbor Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Vertible Secu has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Harbor Convertible go up and down completely randomly.

Pair Corralation between Franklin Mutual and Harbor Convertible

Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.89 times more return on investment than Harbor Convertible. However, Franklin Mutual Global is 1.12 times less risky than Harbor Convertible. It trades about 0.23 of its potential returns per unit of risk. Harbor Vertible Securities is currently generating about -0.02 per unit of risk. If you would invest  2,774  in Franklin Mutual Global on December 22, 2024 and sell it today you would earn a total of  261.00  from holding Franklin Mutual Global or generate 9.41% return on investment over 90 days.

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

Franklin Mutual Global  vs.  Harbor Vertible Securities

Franklin Mutual Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Global are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Franklin Mutual may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Harbor Vertible Secu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbor Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Harbor Convertible 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 Harbor Convertible

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

The idea behind Franklin Mutual Global and Harbor Vertible Securities 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.