Correlation Between Federated Government and Franklin Moderate
Can any of the company-specific risk be diversified away by investing in both Federated Government and Franklin Moderate 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 Federated Government and Franklin Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Ultrashort and Franklin Moderate Allocation, you can compare the effects of market volatilities on Federated Government and Franklin Moderate 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 Federated Government with a short position of Franklin Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Franklin Moderate.
Diversification Opportunities for Federated Government and Franklin Moderate
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Franklin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate and Federated Government 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 Federated Government Ultrashort are associated (or correlated) with Franklin Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Federated Government i.e., Federated Government and Franklin Moderate go up and down completely randomly.
Pair Corralation between Federated Government and Franklin Moderate
Assuming the 90 days horizon Federated Government Ultrashort is not expected to generate positive returns. However, Federated Government Ultrashort is 16.84 times less risky than Franklin Moderate. It waists most of its returns potential to compensate for thr risk taken. Franklin Moderate is generating about 0.17 per unit of risk. If you would invest 1,588 in Franklin Moderate Allocation on November 6, 2024 and sell it today you would earn a total of 27.00 from holding Franklin Moderate Allocation or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Franklin Moderate Allocation
Performance |
| Timeline |
| Federated Government |
| Franklin Moderate |
Federated Government and Franklin Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Franklin Moderate
The main advantage of trading using opposite Federated Government and Franklin Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Franklin Moderate 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 Moderate will offset losses from the drop in Franklin Moderate's long position.| Federated Government vs. Buffalo High Yield | Federated Government vs. T Rowe Price | Federated Government vs. Prudential High Yield | Federated Government vs. Dunham High Yield |
| Franklin Moderate vs. Qs Global Equity | Franklin Moderate vs. Ab Global Bond | Franklin Moderate vs. Aqr Global Macro | Franklin Moderate vs. Barings Global Floating |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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