Correlation Between DTF Tax and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both DTF Tax and Franklin Templeton 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 DTF Tax and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTF Tax Free and Franklin Templeton Limited, you can compare the effects of market volatilities on DTF Tax and Franklin Templeton 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 DTF Tax with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTF Tax and Franklin Templeton.
Diversification Opportunities for DTF Tax and Franklin Templeton
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DTF and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and DTF Tax 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 DTF Tax Free are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of DTF Tax i.e., DTF Tax and Franklin Templeton go up and down completely randomly.
Pair Corralation between DTF Tax and Franklin Templeton
Considering the 90-day investment horizon DTF Tax is expected to generate 2.03 times less return on investment than Franklin Templeton. But when comparing it to its historical volatility, DTF Tax Free is 1.43 times less risky than Franklin Templeton. It trades about 0.08 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Franklin Templeton Limited on November 9, 2024 and sell it today you would earn a total of 105.00 from holding Franklin Templeton Limited or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTF Tax Free vs. Franklin Templeton Limited
Performance |
| Timeline |
| DTF Tax Free |
| Franklin Templeton |
DTF Tax and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTF Tax and Franklin Templeton
The main advantage of trading using opposite DTF Tax and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTF Tax position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| DTF Tax vs. MFS Investment Grade | DTF Tax vs. Eaton Vance National | DTF Tax vs. MFS High Yield | DTF Tax vs. MFS Municipal Income |
| Franklin Templeton vs. MFS Investment Grade | Franklin Templeton vs. Eaton Vance National | Franklin Templeton vs. Rivernorth Opportunistic Municipalome | Franklin Templeton vs. RiverNorth Managed Duration |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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