Correlation Between Franklin Federal and Jhancock Short
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Jhancock Short 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 Federal and Jhancock Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Jhancock Short Duration, you can compare the effects of market volatilities on Franklin Federal and Jhancock Short 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 Federal with a short position of Jhancock Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Jhancock Short.
Diversification Opportunities for Franklin Federal and Jhancock Short
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FRANKLIN and Jhancock is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Jhancock Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Short Duration and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Jhancock Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Short Duration has no effect on the direction of Franklin Federal i.e., Franklin Federal and Jhancock Short go up and down completely randomly.
Pair Corralation between Franklin Federal and Jhancock Short
Assuming the 90 days horizon Franklin Federal is expected to generate 1.5 times less return on investment than Jhancock Short. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.46 times less risky than Jhancock Short. It trades about 0.13 of its potential returns per unit of risk. Jhancock Short Duration is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 843.00 in Jhancock Short Duration on September 3, 2024 and sell it today you would earn a total of 93.00 from holding Jhancock Short Duration or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Jhancock Short Duration
Performance |
| Timeline |
| Franklin Federal Lim |
| Jhancock Short Duration |
Franklin Federal and Jhancock Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Jhancock Short
The main advantage of trading using opposite Franklin Federal and Jhancock Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Jhancock Short 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 Jhancock Short will offset losses from the drop in Jhancock Short's long position.| Franklin Federal vs. Aqr Long Short Equity | Franklin Federal vs. Barings Active Short | Franklin Federal vs. Maryland Short Term Tax Free | Franklin Federal vs. Rbc Short Duration |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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