Correlation Between Chartwell Short and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Chartwell Short 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 Chartwell Short and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chartwell Short Duration and Franklin Federal Limited Term, you can compare the effects of market volatilities on Chartwell Short 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 Chartwell Short with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chartwell Short and Franklin Federal.
Diversification Opportunities for Chartwell Short and Franklin Federal
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chartwell and FRANKLIN is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Short Duration 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 Chartwell 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 Chartwell Short Duration 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 Chartwell Short i.e., Chartwell Short and Franklin Federal go up and down completely randomly.
Pair Corralation between Chartwell Short and Franklin Federal
Assuming the 90 days horizon Chartwell Short is expected to generate 1.16 times less return on investment than Franklin Federal. But when comparing it to its historical volatility, Chartwell Short Duration is 1.41 times less risky than Franklin Federal. It trades about 0.2 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,026 in Franklin Federal Limited Term on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Franklin Federal Limited Term or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chartwell Short Duration vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Chartwell Short Duration |
| Franklin Federal Lim |
Chartwell Short and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chartwell Short and Franklin Federal
The main advantage of trading using opposite Chartwell Short and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chartwell Short 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.| Chartwell Short vs. Franklin Lifesmart Retirement | Chartwell Short vs. Blackrock Moderate Prepared | Chartwell Short vs. Fidelity Managed Retirement | Chartwell Short vs. Wisdomtree Siegel Moderate |
| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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