Correlation Between Franklin California and Us Government
Can any of the company-specific risk be diversified away by investing in both Franklin California and Us Government 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 California and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California High and Us Government Plus, you can compare the effects of market volatilities on Franklin California and Us Government 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 California with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Us Government.
Diversification Opportunities for Franklin California and Us Government
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and GVPIX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California High and Us Government Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Plus and Franklin California 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 California High are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Plus has no effect on the direction of Franklin California i.e., Franklin California and Us Government go up and down completely randomly.
Pair Corralation between Franklin California and Us Government
Assuming the 90 days horizon Franklin California High is expected to generate 0.25 times more return on investment than Us Government. However, Franklin California High is 4.08 times less risky than Us Government. It trades about -0.05 of its potential returns per unit of risk. Us Government Plus is currently generating about -0.13 per unit of risk. If you would invest 1,004 in Franklin California High on August 29, 2024 and sell it today you would lose (6.00) from holding Franklin California High or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Franklin California High vs. Us Government Plus
Performance |
| Timeline |
| Franklin California High |
| Us Government Plus |
Franklin California and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Us Government
The main advantage of trading using opposite Franklin California and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Franklin California vs. Virtus Seix Government | Franklin California vs. John Hancock Government | Franklin California vs. Government Securities Fund | Franklin California vs. Us Government Plus |
| Us Government vs. Government Long Bond | Us Government vs. HUMANA INC | Us Government vs. Aquagold International | Us Government vs. Barloworld Ltd ADR |
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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