Correlation Between Franklin Adjustable and Consumer Services

Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Consumer Services 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 Consumer Services 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 Consumer Services Ultrasector, you can compare the effects of market volatilities on Franklin Adjustable and Consumer Services 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 Consumer Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Consumer Services.

Diversification Opportunities for Franklin Adjustable and Consumer Services

0.83

Correlation Coefficient

Franklin Adjustable  Consumer Services

Very poor diversification

The 3 months correlation between Franklin and Consumer is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Consumer Services Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Services 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 Consumer Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Services has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Consumer Services go up and down completely randomly.

Pair Corralation between Franklin Adjustable and Consumer Services

Assuming the 90 days horizon Franklin Adjustable Government is not expected to generate positive returns. However, Franklin Adjustable Government is 23.56 times less risky than Consumer Services. It waists most of its returns potential to compensate for thr risk taken. Consumer Services is generating about 0.15 per unit of risk. If you would invest  7,484  in Consumer Services Ultrasector on July 5, 2025 and sell it today you would earn a total of  325.00  from holding Consumer Services Ultrasector or generate 4.34% 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.  Consumer Services Ultrasector

Franklin Adjustable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Adjustable Government are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Adjustable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Consumer Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Services Ultrasector are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Consumer Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Adjustable and Consumer Services

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

The idea behind Franklin Adjustable Government and Consumer Services Ultrasector 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.