Correlation Between Multisector Bond and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Franklin Natural 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 Multisector Bond and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Franklin Natural Resources, you can compare the effects of market volatilities on Multisector Bond and Franklin Natural 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 Multisector Bond with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Franklin Natural.
Diversification Opportunities for Multisector Bond and Franklin Natural
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multisector and Franklin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Multisector Bond i.e., Multisector Bond and Franklin Natural go up and down completely randomly.
Pair Corralation between Multisector Bond and Franklin Natural
Assuming the 90 days horizon Multisector Bond is expected to generate 1.25 times less return on investment than Franklin Natural. But when comparing it to its historical volatility, Multisector Bond Sma is 2.88 times less risky than Franklin Natural. It trades about 0.3 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,098 in Franklin Natural Resources on June 13, 2025 and sell it today you would earn a total of 194.00 from holding Franklin Natural Resources or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Franklin Natural Resources
Performance |
| Timeline |
| Multisector Bond Sma |
| Franklin Natural Res |
Multisector Bond and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Franklin Natural
The main advantage of trading using opposite Multisector Bond and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Multisector Bond vs. Fidelity Advisor Health | Multisector Bond vs. Deutsche Health And | Multisector Bond vs. The Hartford Healthcare | Multisector Bond vs. Putnam Global Health |
| Franklin Natural vs. Jhvit Core Bond | Franklin Natural vs. Ab Bond Inflation | Franklin Natural vs. Ab Bond Inflation | Franklin Natural vs. Praxis Impact Bond |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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