Correlation Between Franklin Mutual and Ultrashort Mid

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

Diversification Opportunities for Franklin Mutual and Ultrashort Mid

-0.28

Correlation Coefficient

Franklin Mutual  Ultrashort Mid

Very good diversification

The 3 months correlation between Franklin and Ultrashort is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Ultrashort Mid Cap Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Mid Cap 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 Ultrashort Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Mid Cap has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Ultrashort Mid go up and down completely randomly.

Pair Corralation between Franklin Mutual and Ultrashort Mid

Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.4 times more return on investment than Ultrashort Mid. However, Franklin Mutual Global is 2.48 times less risky than Ultrashort Mid. It trades about 0.01 of its potential returns per unit of risk. Ultrashort Mid Cap Profund is currently generating about -0.03 per unit of risk. If you would invest  2,729  in Franklin Mutual Global on October 3, 2024 and sell it today you would earn a total of  48.00  from holding Franklin Mutual Global or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Franklin Mutual Global  vs.  Ultrashort Mid Cap Profund

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.

Ultrashort Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrashort Mid Cap Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ultrashort Mid 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 Ultrashort Mid

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

The idea behind Franklin Mutual Global and Ultrashort Mid Cap Profund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.