Correlation Between Franklin Federal and Victory Tax-exempt
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Victory Tax-exempt 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 Victory Tax-exempt 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 Victory Tax Exempt Fund, you can compare the effects of market volatilities on Franklin Federal and Victory Tax-exempt 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 Victory Tax-exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Victory Tax-exempt.
Diversification Opportunities for Franklin Federal and Victory Tax-exempt
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Victory is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Victory Tax Exempt Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Tax Exempt 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 Victory Tax-exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Tax Exempt has no effect on the direction of Franklin Federal i.e., Franklin Federal and Victory Tax-exempt go up and down completely randomly.
Pair Corralation between Franklin Federal and Victory Tax-exempt
Assuming the 90 days horizon Franklin Federal Tax Free is expected to generate 0.7 times more return on investment than Victory Tax-exempt. However, Franklin Federal Tax Free is 1.43 times less risky than Victory Tax-exempt. It trades about -0.06 of its potential returns per unit of risk. Victory Tax Exempt Fund is currently generating about -0.05 per unit of risk. If you would invest 1,084 in Franklin Federal Tax Free on November 4, 2024 and sell it today you would lose (3.00) from holding Franklin Federal Tax Free or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Victory Tax Exempt Fund
Performance |
| Timeline |
| Franklin Federal Tax |
| Victory Tax Exempt |
Franklin Federal and Victory Tax-exempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Victory Tax-exempt
The main advantage of trading using opposite Franklin Federal and Victory Tax-exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Victory Tax-exempt 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 Victory Tax-exempt will offset losses from the drop in Victory Tax-exempt's long position.| Franklin Federal vs. Jhancock Diversified Macro | Franklin Federal vs. Gmo Quality Fund | Franklin Federal vs. Issachar Fund Class | Franklin Federal vs. Schwab Small Cap Index |
| Victory Tax-exempt vs. Transamerica High Yield | Victory Tax-exempt vs. Catalyst Exceed Defined | Victory Tax-exempt vs. Aqr Risk Parity | Victory Tax-exempt vs. Pace High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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