Correlation Between Franklin Federal and Blrc Sgy
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Blrc Sgy 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 Blrc Sgy 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 Blrc Sgy Mnp, you can compare the effects of market volatilities on Franklin Federal and Blrc Sgy 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 Blrc Sgy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Blrc Sgy.
Diversification Opportunities for Franklin Federal and Blrc Sgy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Blrc is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Blrc Sgy Mnp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blrc Sgy Mnp 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 Blrc Sgy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blrc Sgy Mnp has no effect on the direction of Franklin Federal i.e., Franklin Federal and Blrc Sgy go up and down completely randomly.
Pair Corralation between Franklin Federal and Blrc Sgy
Assuming the 90 days horizon Franklin Federal Tax Free is expected to generate 0.9 times more return on investment than Blrc Sgy. However, Franklin Federal Tax Free is 1.11 times less risky than Blrc Sgy. It trades about 0.18 of its potential returns per unit of risk. Blrc Sgy Mnp is currently generating about 0.16 per unit of risk. If you would invest 980.00 in Franklin Federal Tax Free on September 1, 2024 and sell it today you would earn a total of 122.00 from holding Franklin Federal Tax Free or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Blrc Sgy Mnp
Performance |
| Timeline |
| Franklin Federal Tax |
| Blrc Sgy Mnp |
Franklin Federal and Blrc Sgy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Blrc Sgy
The main advantage of trading using opposite Franklin Federal and Blrc Sgy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Blrc Sgy 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 Blrc Sgy will offset losses from the drop in Blrc Sgy's long position.| Franklin Federal vs. Icon Financial Fund | Franklin Federal vs. Fidelity Advisor Financial | Franklin Federal vs. Prudential Jennison Financial | Franklin Federal vs. Davis Financial Fund |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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