Correlation Between Mfs Diversified and Franklin Income
Can any of the company-specific risk be diversified away by investing in both Mfs Diversified and Franklin Income 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 Mfs Diversified and Franklin Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Diversified Income and Franklin Income Fund, you can compare the effects of market volatilities on Mfs Diversified and Franklin Income 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 Mfs Diversified with a short position of Franklin Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Diversified and Franklin Income.
Diversification Opportunities for Mfs Diversified and Franklin Income
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MFS DIVERSIFIED INCOME and FRANKLIN INCOME FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Income Fund and Mfs Diversified 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 Mfs Diversified Income are associated (or correlated) with Franklin Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Income Fund has no effect on the direction of Mfs Diversified i.e., Mfs Diversified and Franklin Income go up and down completely randomly.
Pair Corralation between Mfs Diversified and Franklin Income
Assuming the 90 days horizon Mfs Diversified Income is expected to generate 1.03 times more return on investment than Franklin Income. However, Mfs Diversified is 1.03 times more volatile than Franklin Income Fund. It trades about 0.11 of its potential returns per unit of risk. Franklin Income Fund is currently generating about 0.11 per unit of risk. If you would invest 1,129 in Mfs Diversified Income on December 29, 2023 and sell it today you would earn a total of 80.00 from holding Mfs Diversified Income or generate 7.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MFS DIVERSIFIED INCOME vs. FRANKLIN INCOME FUND
Performance |
Timeline |
Mfs Diversified Income |
Franklin Income Fund |
Mfs Diversified and Franklin Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mfs Diversified and Franklin Income
The main advantage of trading using opposite Mfs Diversified and Franklin Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Diversified position performs unexpectedly, Franklin Income 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 Income will offset losses from the drop in Franklin Income's long position.Mfs Diversified vs. Mfs Prudent Investor | Mfs Diversified vs. Mfs Prudent Investor | Mfs Diversified vs. Mfs Prudent Investor | Mfs Diversified vs. Mfs Prudent Investor |
Franklin Income vs. Franklin Mutual Beacon | Franklin Income vs. Templeton Developing Markets | Franklin Income vs. Franklin Mutual Global | Franklin Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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