Correlation Between Franklin High and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin High and Hartford Municipal 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 High and Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Hartford Municipal Income, you can compare the effects of market volatilities on Franklin High and Hartford Municipal 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 High with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Hartford Municipal.
Diversification Opportunities for Franklin High and Hartford Municipal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Hartford is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Hartford Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal Income and Franklin High 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 High Income are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal Income has no effect on the direction of Franklin High i.e., Franklin High and Hartford Municipal go up and down completely randomly.
Pair Corralation between Franklin High and Hartford Municipal
Assuming the 90 days horizon Franklin High Income is expected to generate 1.29 times more return on investment than Hartford Municipal. However, Franklin High is 1.29 times more volatile than Hartford Municipal Income. It trades about 0.05 of its potential returns per unit of risk. Hartford Municipal Income is currently generating about -0.15 per unit of risk. If you would invest 175.00 in Franklin High Income on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Franklin High Income or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Hartford Municipal Income
Performance |
| Timeline |
| Franklin High Income |
| Hartford Municipal Income |
Franklin High and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Hartford Municipal
The main advantage of trading using opposite Franklin High and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Hartford Municipal 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| Franklin High vs. Gugg Actv Invmt | Franklin High vs. Ironclad Managed Risk | Franklin High vs. Ab High Income | Franklin High vs. The Hartford High |
| Hartford Municipal vs. Schwab Government Money | Hartford Municipal vs. Cref Money Market | Hartford Municipal vs. Davis Financial Fund | Hartford Municipal vs. 1919 Financial Services |
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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