Correlation Between Franklin Mutual and William Blair

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

Diversification Opportunities for Franklin Mutual and William Blair

-0.91

Correlation Coefficient

Franklin Mutual  William Blair

Pay attention - limited upside

The 3 months correlation between Franklin and William is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and William Blair Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Emerging 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Emerging has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and William Blair go up and down completely randomly.

Pair Corralation between Franklin Mutual and William Blair

Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.71 times more return on investment than William Blair. However, Franklin Mutual Global is 1.41 times less risky than William Blair. It trades about 0.22 of its potential returns per unit of risk. William Blair Emerging is currently generating about -0.19 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 Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Franklin Mutual Global  vs.  William Blair Emerging

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 16 (%) 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.

William Blair Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Franklin Mutual and William Blair

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

The idea behind Franklin Mutual Global and William Blair Emerging 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.