Correlation Between Franklin High and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Franklin High and Blue Chip 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 Blue Chip 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 Blue Chip Fund, you can compare the effects of market volatilities on Franklin High and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Blue Chip.
Diversification Opportunities for Franklin High and Blue Chip
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Blue is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Franklin High i.e., Franklin High and Blue Chip go up and down completely randomly.
Pair Corralation between Franklin High and Blue Chip
Assuming the 90 days horizon Franklin High is expected to generate 1.03 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Franklin High Yield is 4.39 times less risky than Blue Chip. It trades about 0.42 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,906 in Blue Chip Fund on September 12, 2024 and sell it today you would earn a total of 65.00 from holding Blue Chip Fund or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Blue Chip Fund
Performance |
| Timeline |
| Franklin High Yield |
| Blue Chip Fund |
Franklin High and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Blue Chip
The main advantage of trading using opposite Franklin High and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip'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 |
| Blue Chip vs. Prudential Government Income | Blue Chip vs. Ridgeworth Seix Government | Blue Chip vs. Long Term Government Fund | Blue Chip vs. Schwab Government Money |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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