Correlation Between Franklin High and Transamerica Mid
Can any of the company-specific risk be diversified away by investing in both Franklin High and Transamerica Mid 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 Transamerica Mid 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 Transamerica Mid Cap, you can compare the effects of market volatilities on Franklin High and Transamerica Mid 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 Transamerica Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Transamerica Mid.
Diversification Opportunities for Franklin High and Transamerica Mid
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Transamerica is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Transamerica Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Mid Cap 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 Transamerica Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Mid Cap has no effect on the direction of Franklin High i.e., Franklin High and Transamerica Mid go up and down completely randomly.
Pair Corralation between Franklin High and Transamerica Mid
Assuming the 90 days horizon Franklin High is expected to generate 3.64 times less return on investment than Transamerica Mid. But when comparing it to its historical volatility, Franklin High Yield is 3.66 times less risky than Transamerica Mid. It trades about 0.09 of its potential returns per unit of risk. Transamerica Mid Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 674.00 in Transamerica Mid Cap on September 12, 2024 and sell it today you would earn a total of 412.00 from holding Transamerica Mid Cap or generate 61.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin High Yield vs. Transamerica Mid Cap
Performance |
| Timeline |
| Franklin High Yield |
| Transamerica Mid Cap |
Franklin High and Transamerica Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Transamerica Mid
The main advantage of trading using opposite Franklin High and Transamerica Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Transamerica Mid 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 Transamerica Mid will offset losses from the drop in Transamerica Mid'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 |
| Transamerica Mid vs. Morningstar Municipal Bond | Transamerica Mid vs. Nuveen Minnesota Municipal | Transamerica Mid vs. Franklin High Yield | Transamerica Mid vs. Bbh Intermediate Municipal |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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