Correlation Between Calvert High and Franklin High
Can any of the company-specific risk be diversified away by investing in both Calvert High and Franklin High 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 Calvert High and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert High Yield and Franklin High Income, you can compare the effects of market volatilities on Calvert High and Franklin High 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 Calvert High with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert High and Franklin High.
Diversification Opportunities for Calvert High and Franklin High
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Calvert and Franklin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Calvert High Yield and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Calvert High 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 Calvert High Yield are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of Calvert High i.e., Calvert High and Franklin High go up and down completely randomly.
Pair Corralation between Calvert High and Franklin High
Assuming the 90 days horizon Calvert High is expected to generate 1.33 times less return on investment than Franklin High. But when comparing it to its historical volatility, Calvert High Yield is 1.37 times less risky than Franklin High. It trades about 0.12 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 144.00 in Franklin High Income on August 24, 2024 and sell it today you would earn a total of 32.00 from holding Franklin High Income or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert High Yield vs. Franklin High Income
Performance |
| Timeline |
| Calvert High Yield |
| Franklin High Income |
Calvert High and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert High and Franklin High
The main advantage of trading using opposite Calvert High and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert High position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Calvert High vs. Invesco Government Fund | Calvert High vs. Us Government Securities | Calvert High vs. Vanguard Short Term Government | Calvert High vs. Dreyfus Government Cash |
| Franklin High vs. Prudential High Yield | Franklin High vs. Parametric Modity Strategy | Franklin High vs. HUMANA INC | Franklin High vs. Aquagold International |
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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