Correlation Between Income Fund and Franklin Founding
Can any of the company-specific risk be diversified away by investing in both Income Fund and Franklin Founding 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 Income Fund and Franklin Founding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Franklin Founding Funds, you can compare the effects of market volatilities on Income Fund and Franklin Founding 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 Income Fund with a short position of Franklin Founding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Franklin Founding.
Diversification Opportunities for Income Fund and Franklin Founding
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Income and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Franklin Founding Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Founding Funds and Income Fund 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 Income Fund Of are associated (or correlated) with Franklin Founding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Founding Funds has no effect on the direction of Income Fund i.e., Income Fund and Franklin Founding go up and down completely randomly.
Pair Corralation between Income Fund and Franklin Founding
Assuming the 90 days horizon Income Fund Of is expected to generate 1.1 times more return on investment than Franklin Founding. However, Income Fund is 1.1 times more volatile than Franklin Founding Funds. It trades about -0.28 of its potential returns per unit of risk. Franklin Founding Funds is currently generating about -0.4 per unit of risk. If you would invest 2,404 in Income Fund Of on January 20, 2024 and sell it today you would lose (69.00) from holding Income Fund Of or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Franklin Founding Funds
Performance |
| Timeline |
| Income Fund |
| Franklin Founding Funds |
Income Fund and Franklin Founding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Franklin Founding
The main advantage of trading using opposite Income Fund and Franklin Founding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Franklin Founding 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 Franklin Founding will offset losses from the drop in Franklin Founding's long position.| Income Fund vs. New World Fund | Income Fund vs. American Mutual Fund | Income Fund vs. American Mutual Fund | Income Fund vs. American Funds Income |
| Franklin Founding vs. Franklin Mutual Beacon | Franklin Founding vs. Templeton Developing Markets | Franklin Founding vs. Franklin Mutual Global | Franklin Founding vs. Franklin Mutual Global |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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