Correlation Between Federated High and Franklin Founding
Can any of the company-specific risk be diversified away by investing in both Federated High and Franklin Founding 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 High and Franklin Founding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Yield and Franklin Founding Funds, you can compare the effects of market volatilities on Federated High and Franklin Founding 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 High with a short position of Franklin Founding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Franklin Founding.
Diversification Opportunities for Federated High and Franklin Founding
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Franklin Founding Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Founding Funds and Federated 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 Federated High Yield are associated (or correlated) with Franklin Founding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Founding Funds has no effect on the direction of Federated High i.e., Federated High and Franklin Founding go up and down completely randomly.
Pair Corralation between Federated High and Franklin Founding
Assuming the 90 days horizon Federated High is expected to generate 1.01 times less return on investment than Franklin Founding. But when comparing it to its historical volatility, Federated High Yield is 2.39 times less risky than Franklin Founding. It trades about 0.16 of its potential returns per unit of risk. Franklin Founding Funds is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,469 in Franklin Founding Funds on October 25, 2024 and sell it today you would earn a total of 110.00 from holding Franklin Founding Funds or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Franklin Founding Funds
Performance |
| Timeline |
| Federated High Yield |
| Franklin Founding Funds |
Federated High and Franklin Founding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Franklin Founding
The main advantage of trading using opposite Federated High and Franklin Founding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Franklin Founding 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 Founding will offset losses from the drop in Franklin Founding's long position.| Federated High vs. Jpmorgan High Yield | Federated High vs. Lord Abbett Short | Federated High vs. T Rowe Price | Federated High vs. Voya High Yield |
| Franklin Founding vs. Tfa Quantitative | Franklin Founding vs. Rational Dividend Capture | Franklin Founding vs. T Rowe Price | Franklin Founding vs. T Rowe Price |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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