Correlation Between Franklin Federal and Invesco International
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Invesco International 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 Franklin Federal and Invesco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Tax Free and Invesco International Growth, you can compare the effects of market volatilities on Franklin Federal and Invesco International 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 Franklin Federal with a short position of Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Invesco International.
Diversification Opportunities for Franklin Federal and Invesco International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Invesco is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Invesco International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and Franklin Federal 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 Franklin Federal Tax Free are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Franklin Federal i.e., Franklin Federal and Invesco International go up and down completely randomly.
Pair Corralation between Franklin Federal and Invesco International
Assuming the 90 days horizon Franklin Federal Tax Free is expected to generate 0.26 times more return on investment than Invesco International. However, Franklin Federal Tax Free is 3.85 times less risky than Invesco International. It trades about 0.06 of its potential returns per unit of risk. Invesco International Growth is currently generating about 0.0 per unit of risk. If you would invest 1,046 in Franklin Federal Tax Free on November 4, 2024 and sell it today you would earn a total of 35.00 from holding Franklin Federal Tax Free or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Invesco International Growth
Performance |
| Timeline |
| Franklin Federal Tax |
| Invesco International |
Franklin Federal and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Invesco International
The main advantage of trading using opposite Franklin Federal and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Invesco International 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 Invesco International will offset losses from the drop in Invesco International's long position.| Franklin Federal vs. Fidelity Advisor Financial | Franklin Federal vs. Icon Financial Fund | Franklin Federal vs. Financial Industries Fund | Franklin Federal vs. Vanguard Financials Index |
| Invesco International vs. Qs Global Equity | Invesco International vs. Investec Global Franchise | Invesco International vs. Mirova Global Green | Invesco International vs. Us Global Investors |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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