Correlation Between Ab Select and Franklin California
Can any of the company-specific risk be diversified away by investing in both Ab Select and Franklin California 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 Ab Select and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Longshort and Franklin California Tax Free, you can compare the effects of market volatilities on Ab Select and Franklin California 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 Ab Select with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Franklin California.
Diversification Opportunities for Ab Select and Franklin California
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASCLX and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Longshort and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Ab Select 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 Ab Select Longshort are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Ab Select i.e., Ab Select and Franklin California go up and down completely randomly.
Pair Corralation between Ab Select and Franklin California
Assuming the 90 days horizon Ab Select Longshort is expected to under-perform the Franklin California. In addition to that, Ab Select is 11.65 times more volatile than Franklin California Tax Free. It trades about -0.2 of its total potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.51 per unit of volatility. If you would invest 684.00 in Franklin California Tax Free on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Franklin California Tax Free or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Longshort vs. Franklin California Tax Free
Performance |
| Timeline |
| Ab Select Longshort |
| Franklin California Tax |
Ab Select and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Franklin California
The main advantage of trading using opposite Ab Select and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Ab Select vs. Diamond Hill Long Short | Ab Select vs. Pimco Rae Worldwide | Ab Select vs. SCOR PK | Ab Select vs. Morningstar Unconstrained Allocation |
| Franklin California vs. Vanguard California Long Term | Franklin California vs. Vanguard California Long Term | Franklin California vs. SCOR PK | Franklin California vs. Morningstar Unconstrained Allocation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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