Correlation Between Franklin Mutual and Blue Current

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

Diversification Opportunities for Franklin Mutual and Blue Current

0.73

Correlation Coefficient

Franklin Mutual  Blue Current

Poor diversification

The 3 months correlation between Franklin and Blue is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Blue Current Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Current Global 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 Blue Current. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Current Global has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Blue Current go up and down completely randomly.

Pair Corralation between Franklin Mutual and Blue Current

Assuming the 90 days horizon Franklin Mutual Global is expected to under-perform the Blue Current. In addition to that, Franklin Mutual is 1.49 times more volatile than Blue Current Global. It trades about -0.11 of its total potential returns per unit of risk. Blue Current Global is currently generating about 0.01 per unit of volatility. If you would invest  1,627  in Blue Current Global on October 24, 2024 and sell it today you would earn a total of  8.00  from holding Blue Current Global or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Franklin Mutual Global  vs.  Blue Current Global

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 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.

Blue Current Global

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Franklin Mutual Global and Blue Current Global 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.