Correlation Between Franklin High and Virtus Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin High and Virtus Convertible 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 Virtus Convertible 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 Virtus Convertible, you can compare the effects of market volatilities on Franklin High and Virtus Convertible 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 Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Virtus Convertible.
Diversification Opportunities for Franklin High and Virtus Convertible
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Virtus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible 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 Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Franklin High i.e., Franklin High and Virtus Convertible go up and down completely randomly.
Pair Corralation between Franklin High and Virtus Convertible
Assuming the 90 days horizon Franklin High is expected to generate 5.93 times less return on investment than Virtus Convertible. But when comparing it to its historical volatility, Franklin High Income is 2.97 times less risky than Virtus Convertible. It trades about 0.12 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,581 in Virtus Convertible on September 14, 2024 and sell it today you would earn a total of 119.00 from holding Virtus Convertible or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Virtus Convertible
Performance |
| Timeline |
| Franklin High Income |
| Virtus Convertible |
Franklin High and Virtus Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Virtus Convertible
The main advantage of trading using opposite Franklin High and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Virtus Convertible 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 Virtus Convertible will offset losses from the drop in Virtus Convertible's long position.| Franklin High vs. Money Market Obligations | Franklin High vs. Ab Government Exchange | Franklin High vs. Schwab Treasury Money | Franklin High vs. Putnam Money Market |
| Virtus Convertible vs. Fisher Large Cap | Virtus Convertible vs. Old Westbury Large | Virtus Convertible vs. Touchstone Large Cap | Virtus Convertible vs. Rational Strategic Allocation |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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