Correlation Between Dunham Porategovernment and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Dunham Porategovernment and Franklin Mutual 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 Dunham Porategovernment and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Porategovernment Bond and Franklin Mutual European, you can compare the effects of market volatilities on Dunham Porategovernment and Franklin Mutual 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 Dunham Porategovernment with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Porategovernment and Franklin Mutual.
Diversification Opportunities for Dunham Porategovernment and Franklin Mutual
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European and Dunham Porategovernment 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 Dunham Porategovernment Bond are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual European has no effect on the direction of Dunham Porategovernment i.e., Dunham Porategovernment and Franklin Mutual go up and down completely randomly.
Pair Corralation between Dunham Porategovernment and Franklin Mutual
Assuming the 90 days horizon Dunham Porategovernment is expected to generate 2.89 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Dunham Porategovernment Bond is 2.16 times less risky than Franklin Mutual. It trades about 0.17 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,434 in Franklin Mutual European on September 13, 2024 and sell it today you would earn a total of 59.00 from holding Franklin Mutual European or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Franklin Mutual European
Performance |
| Timeline |
| Dunham Porategovernment |
| Franklin Mutual European |
Dunham Porategovernment and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Porategovernment and Franklin Mutual
The main advantage of trading using opposite Dunham Porategovernment and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Porategovernment position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Dunham Porategovernment vs. Ab Small Cap | Dunham Porategovernment vs. Vy Columbia Small | Dunham Porategovernment vs. Old Westbury Small | Dunham Porategovernment vs. Pace Smallmedium Value |
| Franklin Mutual vs. Franklin Small Mid Cap | Franklin Mutual vs. Blackrock Glbl Sm | Franklin Mutual vs. Blackrock Fundamental Growth | Franklin Mutual vs. Blackrock Gbl Alloc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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