Correlation Between Franklin High and Franklin Government
Can any of the company-specific risk be diversified away by investing in both Franklin High and Franklin Government 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 Franklin Government 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 Franklin Government Money, you can compare the effects of market volatilities on Franklin High and Franklin Government 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 Franklin Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Franklin Government.
Diversification Opportunities for Franklin High and Franklin Government
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Franklin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money 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 Franklin Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Franklin High i.e., Franklin High and Franklin Government go up and down completely randomly.
Pair Corralation between Franklin High and Franklin Government
Assuming the 90 days horizon Franklin High Yield is expected to generate 2.43 times more return on investment than Franklin Government. However, Franklin High is 2.43 times more volatile than Franklin Government Money. It trades about 0.08 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.12 per unit of risk. If you would invest 798.00 in Franklin High Yield on September 20, 2024 and sell it today you would earn a total of 104.00 from holding Franklin High Yield or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Franklin Government Money
Performance |
| Timeline |
| Franklin High Yield |
| Franklin Government Money |
Franklin High and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Franklin Government
The main advantage of trading using opposite Franklin High and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Franklin Government 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 Government will offset losses from the drop in Franklin Government's long position.| Franklin High vs. John Hancock Ii | Franklin High vs. Queens Road Small | Franklin High vs. Northern Small Cap | Franklin High vs. Royce Opportunity Fund |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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