Correlation Between Franklin Mutual and Ivy Balanced

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

Diversification Opportunities for Franklin Mutual and Ivy Balanced

0.2

Correlation Coefficient

Franklin Mutual  Ivy Balanced

Modest diversification

The 3 months correlation between Franklin and Ivy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Ivy Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Balanced 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 Ivy Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Balanced has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Ivy Balanced go up and down completely randomly.

Pair Corralation between Franklin Mutual and Ivy Balanced

Assuming the 90 days horizon Franklin Mutual is expected to generate 7.68 times less return on investment than Ivy Balanced. In addition to that, Franklin Mutual is 1.48 times more volatile than Ivy Balanced Fund. It trades about 0.01 of its total potential returns per unit of risk. Ivy Balanced Fund is currently generating about 0.1 per unit of volatility. If you would invest  1,813  in Ivy Balanced Fund on October 3, 2024 and sell it today you would earn a total of  553.00  from holding Ivy Balanced Fund or generate 30.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Franklin Mutual Global  vs.  Ivy Balanced Fund

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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ivy Balanced

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Balanced Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Balanced 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 Ivy Balanced

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

The idea behind Franklin Mutual Global and Ivy Balanced Fund 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.