Correlation Between The Short and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both The Short and Franklin Utilities 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 Short and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Short Term and Franklin Utilities Fund, you can compare the effects of market volatilities on The Short and Franklin Utilities 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 Short with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Short and Franklin Utilities.
Diversification Opportunities for The Short and Franklin Utilities
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between The and Franklin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Short Term and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and The Short 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 Short Term are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of The Short i.e., The Short and Franklin Utilities go up and down completely randomly.
Pair Corralation between The Short and Franklin Utilities
Assuming the 90 days horizon The Short is expected to generate 7.42 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, The Short Term is 9.15 times less risky than Franklin Utilities. It trades about 0.21 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,184 in Franklin Utilities Fund on September 1, 2024 and sell it today you would earn a total of 443.00 from holding Franklin Utilities Fund or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
The Short Term vs. Franklin Utilities Fund
Performance |
| Timeline |
| Short Term |
| Franklin Utilities |
The Short and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Short and Franklin Utilities
The main advantage of trading using opposite The Short and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Short position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| The Short vs. Dws Government Money | The Short vs. Us Government Securities | The Short vs. Franklin Adjustable Government | The Short vs. Inverse Government Long |
| Franklin Utilities vs. The Short Term | Franklin Utilities vs. Rbc Short Duration | Franklin Utilities vs. Maryland Short Term Tax Free | Franklin Utilities vs. Franklin Federal Limited Term |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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