Correlation Between Franklin High and Johnson Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin High and Johnson Municipal 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 Johnson Municipal 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 Johnson Municipal Income, you can compare the effects of market volatilities on Franklin High and Johnson Municipal 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 Johnson Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Johnson Municipal.
Diversification Opportunities for Franklin High and Johnson Municipal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Johnson is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Johnson Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Municipal Income 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 Johnson Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Municipal Income has no effect on the direction of Franklin High i.e., Franklin High and Johnson Municipal go up and down completely randomly.
Pair Corralation between Franklin High and Johnson Municipal
Assuming the 90 days horizon Franklin High is expected to generate 1.1 times less return on investment than Johnson Municipal. In addition to that, Franklin High is 1.54 times more volatile than Johnson Municipal Income. It trades about 0.38 of its total potential returns per unit of risk. Johnson Municipal Income is currently generating about 0.64 per unit of volatility. If you would invest 1,638 in Johnson Municipal Income on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Johnson Municipal Income or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin High Yield vs. Johnson Municipal Income
Performance |
| Timeline |
| Franklin High Yield |
| Johnson Municipal Income |
Franklin High and Johnson Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Johnson Municipal
The main advantage of trading using opposite Franklin High and Johnson Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Johnson Municipal 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 Johnson Municipal will offset losses from the drop in Johnson Municipal's long position.| Franklin High vs. Lebenthal Lisanti Small | Franklin High vs. Guidemark Smallmid Cap | Franklin High vs. Vy Columbia Small | Franklin High vs. Ab Small Cap |
| Johnson Municipal vs. Johnson Core Plus | Johnson Municipal vs. Johnson Enhanced Return | Johnson Municipal vs. Johnson Equity Income | Johnson Municipal vs. Johnson Equity Income |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |