Correlation Between Franklin Arizona and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Arizona and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Global, you can compare the effects of market volatilities on Franklin Arizona and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Arizona and Franklin Mutual.
Diversification Opportunities for Franklin Arizona and Franklin Mutual
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Franklin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Arizona Tax Free and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Franklin Arizona i.e., Franklin Arizona and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Arizona and Franklin Mutual
Assuming the 90 days horizon Franklin Arizona Tax Free is expected to generate 0.55 times more return on investment than Franklin Mutual. However, Franklin Arizona Tax Free is 1.82 times less risky than Franklin Mutual. It trades about 0.15 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.03 per unit of risk. If you would invest 983.00 in Franklin Arizona Tax Free on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Franklin Arizona Tax Free or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Arizona Tax Free vs. Franklin Mutual Global
Performance |
| Timeline |
| Franklin Arizona Tax |
| Franklin Mutual Global |
Franklin Arizona and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Arizona and Franklin Mutual
The main advantage of trading using opposite Franklin Arizona and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Arizona position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Franklin Arizona vs. Qs Moderate Growth | Franklin Arizona vs. Lifestyle Ii Moderate | Franklin Arizona vs. Jp Morgan Smartretirement | Franklin Arizona vs. Target Retirement 2040 |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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