Correlation Between Franklin Convertible and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible and Federated Strategic 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 Convertible and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Federated Strategic Income, you can compare the effects of market volatilities on Franklin Convertible and Federated Strategic 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 Convertible with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Federated Strategic.
Diversification Opportunities for Franklin Convertible and Federated Strategic
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Federated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Franklin Convertible 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 Vertible Securities are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Federated Strategic go up and down completely randomly.
Pair Corralation between Franklin Convertible and Federated Strategic
Assuming the 90 days horizon Franklin Vertible Securities is expected to under-perform the Federated Strategic. In addition to that, Franklin Convertible is 2.37 times more volatile than Federated Strategic Income. It trades about -0.09 of its total potential returns per unit of risk. Federated Strategic Income is currently generating about 0.08 per unit of volatility. If you would invest 807.00 in Federated Strategic Income on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Federated Strategic Income or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Federated Strategic Income
Performance |
| Timeline |
| Franklin Convertible |
| Federated Strategic |
Franklin Convertible and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Federated Strategic
The main advantage of trading using opposite Franklin Convertible and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| Franklin Convertible vs. Virtus Multi Sector Short | Franklin Convertible vs. Cmg Ultra Short | Franklin Convertible vs. Alpine Ultra Short | Franklin Convertible vs. Aamhimco Short Duration |
| Federated Strategic vs. Mainstay Vertible Fund | Federated Strategic vs. Franklin Vertible Securities | Federated Strategic vs. Allianzgi Convertible Income | Federated Strategic vs. Gabelli Convertible And |
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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