Correlation Between Intermediate Government and Franklin High
Can any of the company-specific risk be diversified away by investing in both Intermediate Government 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 Intermediate Government and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Franklin High Yield, you can compare the effects of market volatilities on Intermediate Government 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 Intermediate Government with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Franklin High.
Diversification Opportunities for Intermediate Government and Franklin High
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate and Franklin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Intermediate Government 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 Intermediate Government Bond 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 Yield has no effect on the direction of Intermediate Government i.e., Intermediate Government and Franklin High go up and down completely randomly.
Pair Corralation between Intermediate Government and Franklin High
Assuming the 90 days horizon Intermediate Government Bond is expected to generate 0.28 times more return on investment than Franklin High. However, Intermediate Government Bond is 3.63 times less risky than Franklin High. It trades about -0.21 of its potential returns per unit of risk. Franklin High Yield is currently generating about -0.39 per unit of risk. If you would invest 947.00 in Intermediate Government Bond on October 16, 2024 and sell it today you would lose (3.00) from holding Intermediate Government Bond or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. Franklin High Yield
Performance |
| Timeline |
| Intermediate Government |
| Franklin High Yield |
Intermediate Government and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Franklin High
The main advantage of trading using opposite Intermediate Government and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government 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.| Intermediate Government vs. Dws Government Money | Intermediate Government vs. Ubs Money Series | Intermediate Government vs. Money Market Obligations | Intermediate Government vs. Prudential Government Money |
| Franklin High vs. Putnam Diversified Income | Franklin High vs. Allianzgi Diversified Income | Franklin High vs. Adams Diversified Equity | Franklin High vs. Conservative Balanced Allocation |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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