Correlation Between Calvert Aggressive and Franklin Equity

Can any of the company-specific risk be diversified away by investing in both Calvert Aggressive and Franklin Equity 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 Calvert Aggressive and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Aggressive Allocation and Franklin Equity Income, you can compare the effects of market volatilities on Calvert Aggressive and Franklin Equity 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 Calvert Aggressive with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Aggressive and Franklin Equity.

Diversification Opportunities for Calvert Aggressive and Franklin Equity

0.98

Correlation Coefficient

Calvert Aggressive  Franklin Equity

Almost no diversification

The 3 months correlation between Calvert and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Aggressive Allocation and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Calvert Aggressive 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 Calvert Aggressive Allocation are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Calvert Aggressive i.e., Calvert Aggressive and Franklin Equity go up and down completely randomly.

Pair Corralation between Calvert Aggressive and Franklin Equity

Assuming the 90 days horizon Calvert Aggressive is expected to generate 1.1 times less return on investment than Franklin Equity. But when comparing it to its historical volatility, Calvert Aggressive Allocation is 1.04 times less risky than Franklin Equity. It trades about 0.35 of its potential returns per unit of risk. Franklin Equity Income is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  2,872  in Franklin Equity Income on April 21, 2025 and sell it today you would earn a total of  493.00  from holding Franklin Equity Income or generate 17.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Calvert Aggressive Allocation  vs.  Franklin Equity Income

Calvert Aggressive

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Aggressive Allocation are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calvert Aggressive showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Equity Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Equity Income are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Franklin Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calvert Aggressive and Franklin Equity

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

The idea behind Calvert Aggressive Allocation and Franklin Equity Income 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.