Correlation Between Franklin Federal and Robinson Tax
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Robinson Tax 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 Robinson Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Tax Free and Robinson Tax Advantaged, you can compare the effects of market volatilities on Franklin Federal and Robinson Tax 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 Robinson Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Robinson Tax.
Diversification Opportunities for Franklin Federal and Robinson Tax
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Robinson is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Robinson Tax Advantaged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinson Tax Advantaged 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 Tax Free are associated (or correlated) with Robinson Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinson Tax Advantaged has no effect on the direction of Franklin Federal i.e., Franklin Federal and Robinson Tax go up and down completely randomly.
Pair Corralation between Franklin Federal and Robinson Tax
Assuming the 90 days horizon Franklin Federal Tax Free is expected to generate 0.97 times more return on investment than Robinson Tax. However, Franklin Federal Tax Free is 1.04 times less risky than Robinson Tax. It trades about -0.1 of its potential returns per unit of risk. Robinson Tax Advantaged is currently generating about -0.14 per unit of risk. If you would invest 1,069 in Franklin Federal Tax Free on January 18, 2025 and sell it today you would lose (25.00) from holding Franklin Federal Tax Free or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Robinson Tax Advantaged
Performance |
| Timeline |
| Franklin Federal Tax |
| Robinson Tax Advantaged |
Franklin Federal and Robinson Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Robinson Tax
The main advantage of trading using opposite Franklin Federal and Robinson Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Robinson Tax 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 Robinson Tax will offset losses from the drop in Robinson Tax's long position.| Franklin Federal vs. Aqr Risk Parity | Franklin Federal vs. Vanguard Target Retirement | Franklin Federal vs. Alpine High Yield | Franklin Federal vs. Metropolitan West High |
| Robinson Tax vs. Delaware Investments Ultrashort | Robinson Tax vs. Rbc Short Duration | Robinson Tax vs. Cmg Ultra Short | Robinson Tax vs. Prudential Short Term Porate |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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