Correlation Between Franklin High and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Franklin High and Ab Bond 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 Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Ab Bond Inflation, you can compare the effects of market volatilities on Franklin High and Ab Bond 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 Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Ab Bond.
Diversification Opportunities for Franklin High and Ab Bond
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and ABNTX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation 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 Yield are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Franklin High i.e., Franklin High and Ab Bond go up and down completely randomly.
Pair Corralation between Franklin High and Ab Bond
Assuming the 90 days horizon Franklin High is expected to generate 3.52 times less return on investment than Ab Bond. In addition to that, Franklin High is 1.49 times more volatile than Ab Bond Inflation. It trades about 0.05 of its total potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.26 per unit of volatility. If you would invest 1,002 in Ab Bond Inflation on October 26, 2024 and sell it today you would earn a total of 8.00 from holding Ab Bond Inflation or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Ab Bond Inflation
Performance |
| Timeline |
| Franklin High Yield |
| Ab Bond Inflation |
Franklin High and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Ab Bond
The main advantage of trading using opposite Franklin High and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Ab Bond 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| Franklin High vs. Growth Strategy Fund | Franklin High vs. Ashmore Emerging Markets | Franklin High vs. Commodities Strategy Fund | Franklin High vs. Western Assets Emerging |
| Ab Bond vs. Morningstar Defensive Bond | Ab Bond vs. Western Asset Municipal | Ab Bond vs. Multisector Bond Sma | Ab Bond vs. Ab Global Bond |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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