Correlation Between Franklin High and Nuveen Arizona
Can any of the company-specific risk be diversified away by investing in both Franklin High and Nuveen Arizona 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 Nuveen Arizona 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 Nuveen Arizona Municipal, you can compare the effects of market volatilities on Franklin High and Nuveen Arizona 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 Nuveen Arizona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Nuveen Arizona.
Diversification Opportunities for Franklin High and Nuveen Arizona
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Nuveen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Nuveen Arizona Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Arizona Municipal 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 Nuveen Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Arizona Municipal has no effect on the direction of Franklin High i.e., Franklin High and Nuveen Arizona go up and down completely randomly.
Pair Corralation between Franklin High and Nuveen Arizona
Assuming the 90 days horizon Franklin High is expected to generate 1.23 times less return on investment than Nuveen Arizona. In addition to that, Franklin High is 1.26 times more volatile than Nuveen Arizona Municipal. It trades about 0.17 of its total potential returns per unit of risk. Nuveen Arizona Municipal is currently generating about 0.26 per unit of volatility. If you would invest 1,013 in Nuveen Arizona Municipal on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Nuveen Arizona Municipal or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Franklin High Yield vs. Nuveen Arizona Municipal
Performance |
| Timeline |
| Franklin High Yield |
| Nuveen Arizona Municipal |
Franklin High and Nuveen Arizona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Nuveen Arizona
The main advantage of trading using opposite Franklin High and Nuveen Arizona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Nuveen Arizona 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 Nuveen Arizona will offset losses from the drop in Nuveen Arizona's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Nuveen Arizona vs. Prudential High Yield | Nuveen Arizona vs. Alpine High Yield | Nuveen Arizona vs. Gmo High Yield | Nuveen Arizona 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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