Correlation Between The National and Franklin New
Can any of the company-specific risk be diversified away by investing in both The National and Franklin New 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 The National and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Franklin New York, you can compare the effects of market volatilities on The National and Franklin New 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 The National with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Franklin New.
Diversification Opportunities for The National and Franklin New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between THE and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and The National 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 The National Tax Free are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of The National i.e., The National and Franklin New go up and down completely randomly.
Pair Corralation between The National and Franklin New
Assuming the 90 days horizon The National is expected to generate 1.07 times less return on investment than Franklin New. In addition to that, The National is 1.09 times more volatile than Franklin New York. It trades about 0.06 of its total potential returns per unit of risk. Franklin New York is currently generating about 0.07 per unit of volatility. If you would invest 1,030 in Franklin New York on August 27, 2024 and sell it today you would earn a total of 51.00 from holding Franklin New York or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Franklin New York
Performance |
| Timeline |
| National Tax |
| Franklin New York |
The National and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Franklin New
The main advantage of trading using opposite The National and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| Franklin New vs. Vanguard Short Term Government | Franklin New vs. Gamco Global Telecommunications | Franklin New vs. The National Tax Free | Franklin New vs. Dws Government Money |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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