Correlation Between Franklin Mutual and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Vanguard Consumer 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 Vanguard Consumer 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 Vanguard Sumer Staples, you can compare the effects of market volatilities on Franklin Mutual and Vanguard Consumer 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 Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Vanguard Consumer.
Diversification Opportunities for Franklin Mutual and Vanguard Consumer
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Vanguard is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Vanguard Sumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Staples 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 Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Staples has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Franklin Mutual and Vanguard Consumer
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.73 times more return on investment than Vanguard Consumer. However, Franklin Mutual Global is 1.37 times less risky than Vanguard Consumer. It trades about 0.22 of its potential returns per unit of risk. Vanguard Sumer Staples is currently generating about 0.04 per unit of risk. If you would invest 2,770 in Franklin Mutual Global on December 30, 2024 and sell it today you would earn a total of 251.00 from holding Franklin Mutual Global or generate 9.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Mutual Global vs. Vanguard Sumer Staples
Performance |
Timeline |
Franklin Mutual Global |
Vanguard Sumer Staples |
Franklin Mutual and Vanguard Consumer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Mutual and Vanguard Consumer
The main advantage of trading using opposite Franklin Mutual and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.Franklin Mutual vs. Artisan Emerging Markets | Franklin Mutual vs. Franklin Emerging Market | Franklin Mutual vs. Aqr Sustainable Long Short | Franklin Mutual vs. Siit Emerging Markets |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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