Correlation Between Franklin Adjustable and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Vanguard Total 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 Adjustable and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Adjustable Government and Vanguard Total Stock, you can compare the effects of market volatilities on Franklin Adjustable and Vanguard Total 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 Adjustable with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Vanguard Total.
Diversification Opportunities for Franklin Adjustable and Vanguard Total
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Vanguard Total go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Vanguard Total
Assuming the 90 days horizon Franklin Adjustable is expected to generate 12.29 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Franklin Adjustable Government is 6.75 times less risky than Vanguard Total. It trades about 0.14 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 27,845 in Vanguard Total Stock on June 1, 2025 and sell it today you would earn a total of 2,839 from holding Vanguard Total Stock or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Vanguard Total Stock
Performance |
| Timeline |
| Franklin Adjustable |
| Vanguard Total Stock |
Franklin Adjustable and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Vanguard Total
The main advantage of trading using opposite Franklin Adjustable and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| Franklin Adjustable vs. Multimanager Lifestyle Moderate | Franklin Adjustable vs. Voya Target Retirement | Franklin Adjustable vs. Trowe Price Retirement | Franklin Adjustable vs. Columbia Moderate Growth |
| Vanguard Total vs. Neiman Large Cap | Vanguard Total vs. Qs Large Cap | Vanguard Total vs. Large Cap Growth Profund | Vanguard Total vs. Qs Large Cap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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