Correlation Between Franklin Arizona and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Franklin Arizona and Dow Jones 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 Arizona and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Arizona Tax Free and Dow Jones Industrial, you can compare the effects of market volatilities on Franklin Arizona and Dow Jones 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 Arizona with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Arizona and Dow Jones.
Diversification Opportunities for Franklin Arizona and Dow Jones
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Dow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Arizona Tax Free and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Franklin Arizona 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 Arizona Tax Free are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Franklin Arizona i.e., Franklin Arizona and Dow Jones go up and down completely randomly.
Pair Corralation between Franklin Arizona and Dow Jones
Assuming the 90 days horizon Franklin Arizona Tax Free is expected to generate 0.37 times more return on investment than Dow Jones. However, Franklin Arizona Tax Free is 2.68 times less risky than Dow Jones. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of risk. If you would invest 976.00 in Franklin Arizona Tax Free on November 27, 2024 and sell it today you would earn a total of 8.00 from holding Franklin Arizona Tax Free or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Arizona Tax Free vs. Dow Jones Industrial
Performance |
| Timeline |
Franklin Arizona and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Franklin Arizona Tax Free
Pair trading matchups for Franklin Arizona
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Franklin Arizona and Dow Jones
The main advantage of trading using opposite Franklin Arizona and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Arizona position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Franklin Arizona vs. Commodities Strategy Fund | Franklin Arizona vs. Siit Emerging Markets | Franklin Arizona vs. Transamerica Emerging Markets | Franklin Arizona vs. Pace International Emerging |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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