Correlation Between Franklin High and City National
Can any of the company-specific risk be diversified away by investing in both Franklin High and City National 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 City National 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 City National Rochdale, you can compare the effects of market volatilities on Franklin High and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and City National.
Diversification Opportunities for Franklin High and City National
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and City is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Franklin High i.e., Franklin High and City National go up and down completely randomly.
Pair Corralation between Franklin High and City National
Assuming the 90 days horizon Franklin High is expected to generate 2.43 times less return on investment than City National. But when comparing it to its historical volatility, Franklin High Yield is 3.01 times less risky than City National. It trades about 0.09 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,165 in City National Rochdale on September 12, 2024 and sell it today you would earn a total of 812.00 from holding City National Rochdale or generate 37.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin High Yield vs. City National Rochdale
Performance |
| Timeline |
| Franklin High Yield |
| City National Rochdale |
Franklin High and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and City National
The main advantage of trading using opposite Franklin High and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.| Franklin High vs. Cref Money Market | Franklin High vs. Chestnut Street Exchange | Franklin High vs. Aig Government Money | Franklin High vs. Matson Money Equity |
| City National vs. Pace Municipal Fixed | City National vs. Old Westbury Municipal | City National vs. Morningstar Municipal Bond | City National vs. Franklin High Yield |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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