Correlation Between Franklin High and Real Return
Can any of the company-specific risk be diversified away by investing in both Franklin High and Real Return 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 Real Return 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 Real Return Fund, you can compare the effects of market volatilities on Franklin High and Real Return 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 Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Real Return.
Diversification Opportunities for Franklin High and Real Return
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Real is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Real Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Fund 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 Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Fund has no effect on the direction of Franklin High i.e., Franklin High and Real Return go up and down completely randomly.
Pair Corralation between Franklin High and Real Return
Assuming the 90 days horizon Franklin High Income is expected to generate 0.95 times more return on investment than Real Return. However, Franklin High Income is 1.05 times less risky than Real Return. It trades about 0.11 of its potential returns per unit of risk. Real Return Fund is currently generating about 0.04 per unit of risk. If you would invest 146.00 in Franklin High Income on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Franklin High Income or generate 20.55% 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. Real Return Fund
Performance |
| Timeline |
| Franklin High Income |
| Real Return Fund |
Franklin High and Real Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Real Return
The main advantage of trading using opposite Franklin High and Real Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Real Return 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 Real Return will offset losses from the drop in Real Return's long position.| Franklin High vs. Vanguard High Yield Corporate | Franklin High vs. Vanguard High Yield Porate | Franklin High vs. Blackrock Hi Yld | Franklin High vs. Blackrock High Yield |
| Real Return vs. Davenport Small Cap | Real Return vs. The Gabelli Small | Real Return vs. Wasatch Small Cap | Real Return vs. Tiaa Cref Smallmid Cap Equity |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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