Correlation Between Franklin High and Mfs Alabama
Can any of the company-specific risk be diversified away by investing in both Franklin High and Mfs Alabama 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 Mfs Alabama 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 Mfs Alabama Municipal, you can compare the effects of market volatilities on Franklin High and Mfs Alabama 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 Mfs Alabama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Mfs Alabama.
Diversification Opportunities for Franklin High and Mfs Alabama
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Mfs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Mfs Alabama Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Alabama 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 Mfs Alabama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Alabama Municipal has no effect on the direction of Franklin High i.e., Franklin High and Mfs Alabama go up and down completely randomly.
Pair Corralation between Franklin High and Mfs Alabama
Assuming the 90 days horizon Franklin High is expected to generate 1.04 times less return on investment than Mfs Alabama. But when comparing it to its historical volatility, Franklin High Yield is 1.04 times less risky than Mfs Alabama. It trades about 0.17 of its potential returns per unit of risk. Mfs Alabama Municipal is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 948.00 in Mfs Alabama Municipal on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Mfs Alabama Municipal or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Mfs Alabama Municipal
Performance |
| Timeline |
| Franklin High Yield |
| Mfs Alabama Municipal |
Franklin High and Mfs Alabama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Mfs Alabama
The main advantage of trading using opposite Franklin High and Mfs Alabama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Mfs Alabama 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 Mfs Alabama will offset losses from the drop in Mfs Alabama's long position.| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield |
| Mfs Alabama vs. Alliancebernstein National Municipal | Mfs Alabama vs. Franklin High Yield | Mfs Alabama vs. Limited Term Tax | Mfs Alabama vs. Morningstar Municipal Bond |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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