Correlation Between Franklin Mutual and Massmutual Select

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

Diversification Opportunities for Franklin Mutual and Massmutual Select

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Franklin and Massmutual is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Massmutual Select Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Growth 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 Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Growth has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Massmutual Select go up and down completely randomly.

Pair Corralation between Franklin Mutual and Massmutual Select

Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.12 times more return on investment than Massmutual Select. However, Franklin Mutual Global is 8.1 times less risky than Massmutual Select. It trades about -0.03 of its potential returns per unit of risk. Massmutual Select Growth is currently generating about -0.13 per unit of risk. If you would invest  3,183  in Franklin Mutual Global on September 17, 2024 and sell it today you would lose (37.00) from holding Franklin Mutual Global or give up 1.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy78.13%
ValuesDaily Returns

Franklin Mutual Global  vs.  Massmutual Select Growth

 Performance 
       Timeline  
Franklin Mutual Global 

Risk-Adjusted Performance

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Weak
 
Strong
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 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.
Massmutual Select Growth 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Massmutual Select Growth 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Franklin Mutual and Massmutual Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Mutual and Massmutual Select

The main advantage of trading using opposite Franklin Mutual and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select's long position.
The idea behind Franklin Mutual Global and Massmutual Select Growth 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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