Correlation Between California High-yield and Franklin Convertible
Can any of the company-specific risk be diversified away by investing in both California High-yield and Franklin Convertible 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 California High-yield and Franklin Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Franklin Vertible Securities, you can compare the effects of market volatilities on California High-yield and Franklin Convertible 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 California High-yield with a short position of Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Franklin Convertible.
Diversification Opportunities for California High-yield and Franklin Convertible
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible and California High-yield 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 California High Yield Municipal are associated (or correlated) with Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of California High-yield i.e., California High-yield and Franklin Convertible go up and down completely randomly.
Pair Corralation between California High-yield and Franklin Convertible
Assuming the 90 days horizon California High-yield is expected to generate 2.91 times less return on investment than Franklin Convertible. But when comparing it to its historical volatility, California High Yield Municipal is 2.23 times less risky than Franklin Convertible. It trades about 0.13 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,018 in Franklin Vertible Securities on September 3, 2024 and sell it today you would earn a total of 465.00 from holding Franklin Vertible Securities or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Franklin Vertible Securities
Performance |
| Timeline |
| California High Yield |
| Franklin Convertible |
California High-yield and Franklin Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Franklin Convertible
The main advantage of trading using opposite California High-yield and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Franklin Convertible 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 Convertible will offset losses from the drop in Franklin Convertible's long position.| California High-yield vs. Volumetric Fund Volumetric | California High-yield vs. Abr 7525 Volatility | California High-yield vs. Qs Large Cap | California High-yield vs. Ab Value Fund |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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