Correlation Between Boston Partners and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Boston Partners and Franklin Federal 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 Boston Partners and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Partners Longshort and Franklin Federal Limited Term, you can compare the effects of market volatilities on Boston Partners and Franklin Federal 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 Boston Partners with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Franklin Federal.
Diversification Opportunities for Boston Partners and Franklin Federal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Boston and Franklin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Longshort and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Boston Partners 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 Boston Partners Longshort are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Boston Partners i.e., Boston Partners and Franklin Federal go up and down completely randomly.
Pair Corralation between Boston Partners and Franklin Federal
Assuming the 90 days horizon Boston Partners Longshort is expected to generate 5.84 times more return on investment than Franklin Federal. However, Boston Partners is 5.84 times more volatile than Franklin Federal Limited Term. It trades about 0.06 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.19 per unit of risk. If you would invest 1,371 in Boston Partners Longshort on September 12, 2024 and sell it today you would earn a total of 167.00 from holding Boston Partners Longshort or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Partners Longshort vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Boston Partners Longshort |
| Franklin Federal Lim |
Boston Partners and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and Franklin Federal
The main advantage of trading using opposite Boston Partners and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Boston Partners vs. Diamond Hill Long Short | Boston Partners vs. Pimco Rae Worldwide | Boston Partners vs. SCOR PK | Boston Partners vs. Morningstar Unconstrained Allocation |
| Franklin Federal vs. Vanguard Limited Term Tax Exempt | Franklin Federal vs. SCOR PK | Franklin Federal vs. Morningstar Unconstrained Allocation | Franklin Federal vs. Via Renewables |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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