Correlation Between Franklin Federal and Franklin Missouri
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Franklin Missouri 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 Franklin Missouri 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 Franklin Missouri Tax Free, you can compare the effects of market volatilities on Franklin Federal and Franklin Missouri 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 Franklin Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Franklin Missouri.
Diversification Opportunities for Franklin Federal and Franklin Missouri
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Franklin Missouri Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Missouri Tax 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 Franklin Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Missouri Tax has no effect on the direction of Franklin Federal i.e., Franklin Federal and Franklin Missouri go up and down completely randomly.
Pair Corralation between Franklin Federal and Franklin Missouri
Assuming the 90 days horizon Franklin Federal Tax Free is expected to generate 1.02 times more return on investment than Franklin Missouri. However, Franklin Federal is 1.02 times more volatile than Franklin Missouri Tax Free. It trades about -0.01 of its potential returns per unit of risk. Franklin Missouri Tax Free is currently generating about -0.02 per unit of risk. If you would invest 1,099 in Franklin Federal Tax Free on August 29, 2024 and sell it today you would lose (1.00) from holding Franklin Federal Tax Free or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Franklin Missouri Tax Free
Performance |
| Timeline |
| Franklin Federal Tax |
| Franklin Missouri Tax |
Franklin Federal and Franklin Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Franklin Missouri
The main advantage of trading using opposite Franklin Federal and Franklin Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Franklin Missouri 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 Missouri will offset losses from the drop in Franklin Missouri's long position.| Franklin Federal vs. Tortoise Energy Independence | Franklin Federal vs. Gmo Resources | Franklin Federal vs. Gamco Natural Resources | Franklin Federal vs. Franklin Natural Resources |
| Franklin Missouri vs. Strategic Allocation Aggressive | Franklin Missouri vs. Aqr Large Cap | Franklin Missouri vs. Touchstone Large Cap | Franklin Missouri vs. Tax Managed Large Cap |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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