Correlation Between Franklin Arizona and Great-west Loomis
Can any of the company-specific risk be diversified away by investing in both Franklin Arizona and Great-west Loomis 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 Great-west Loomis 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 Great West Loomis Sayles, you can compare the effects of market volatilities on Franklin Arizona and Great-west Loomis 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 Great-west Loomis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Arizona and Great-west Loomis.
Diversification Opportunities for Franklin Arizona and Great-west Loomis
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Great-west is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Arizona Tax Free and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis 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 Great-west Loomis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Loomis has no effect on the direction of Franklin Arizona i.e., Franklin Arizona and Great-west Loomis go up and down completely randomly.
Pair Corralation between Franklin Arizona and Great-west Loomis
Assuming the 90 days horizon Franklin Arizona Tax Free is expected to generate 0.27 times more return on investment than Great-west Loomis. However, Franklin Arizona Tax Free is 3.68 times less risky than Great-west Loomis. It trades about 0.18 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about -0.26 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Arizona Tax Free vs. Great West Loomis Sayles
Performance |
| Timeline |
| Franklin Arizona Tax |
| Great West Loomis |
Franklin Arizona and Great-west Loomis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Arizona and Great-west Loomis
The main advantage of trading using opposite Franklin Arizona and Great-west Loomis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Arizona position performs unexpectedly, Great-west Loomis 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 Great-west Loomis will offset losses from the drop in Great-west Loomis' 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 |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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