Correlation Between Franklin High and Thornburg New
Can any of the company-specific risk be diversified away by investing in both Franklin High and Thornburg New 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 Thornburg New 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 Thornburg New York, you can compare the effects of market volatilities on Franklin High and Thornburg New 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 Thornburg New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Thornburg New.
Diversification Opportunities for Franklin High and Thornburg New
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Thornburg is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Thornburg New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg New York 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 Thornburg New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg New York has no effect on the direction of Franklin High i.e., Franklin High and Thornburg New go up and down completely randomly.
Pair Corralation between Franklin High and Thornburg New
Assuming the 90 days horizon Franklin High Yield is expected to generate 1.8 times more return on investment than Thornburg New. However, Franklin High is 1.8 times more volatile than Thornburg New York. It trades about 0.19 of its potential returns per unit of risk. Thornburg New York is currently generating about 0.22 per unit of risk. If you would invest 904.00 in Franklin High Yield on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Franklin High Yield or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Thornburg New York
Performance |
| Timeline |
| Franklin High Yield |
| Thornburg New York |
Franklin High and Thornburg New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Thornburg New
The main advantage of trading using opposite Franklin High and Thornburg New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Thornburg New 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 Thornburg New will offset losses from the drop in Thornburg New's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Thornburg New vs. T Rowe Price | Thornburg New vs. Gamco Global Telecommunications | Thornburg New vs. The National Tax Free | Thornburg New vs. Franklin High Yield |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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