Correlation Between Equity Growth and Franklin Government
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Franklin Government 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 Equity Growth and Franklin Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Franklin Government Money, you can compare the effects of market volatilities on Equity Growth and Franklin Government 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 Equity Growth with a short position of Franklin Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Franklin Government.
Diversification Opportunities for Equity Growth and Franklin Government
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equity and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Franklin Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Equity Growth i.e., Equity Growth and Franklin Government go up and down completely randomly.
Pair Corralation between Equity Growth and Franklin Government
If you would invest 100.00 in Franklin Government Money on September 23, 2024 and sell it today you would earn a total of 0.00 from holding Franklin Government Money or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Fund vs. Franklin Government Money
Performance |
| Timeline |
| Equity Growth |
| Franklin Government Money |
Equity Growth and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Franklin Government
The main advantage of trading using opposite Equity Growth and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Franklin Government 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 Government will offset losses from the drop in Franklin Government's long position.| Equity Growth vs. Franklin Government Money | Equity Growth vs. Schwab Treasury Money | Equity Growth vs. General Money Market | Equity Growth vs. Chestnut Street Exchange |
| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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