Correlation Between Franklin Adjustable and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Prudential Government 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 Adjustable and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Adjustable Government and Prudential Government Income, you can compare the effects of market volatilities on Franklin Adjustable and Prudential Government 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 Adjustable with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Prudential Government.
Diversification Opportunities for Franklin Adjustable and Prudential Government
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Prudential is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Franklin Adjustable 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 Adjustable Government are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Prudential Government go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Prudential Government
Assuming the 90 days horizon Franklin Adjustable Government is expected to generate 0.28 times more return on investment than Prudential Government. However, Franklin Adjustable Government is 3.62 times less risky than Prudential Government. It trades about 0.14 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.03 per unit of risk. If you would invest 694.00 in Franklin Adjustable Government on August 26, 2024 and sell it today you would earn a total of 59.00 from holding Franklin Adjustable Government or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Prudential Government Income
Performance |
| Timeline |
| Franklin Adjustable |
| Prudential Government |
Franklin Adjustable and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Prudential Government
The main advantage of trading using opposite Franklin Adjustable and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Franklin Adjustable vs. Short Duration Inflation | Franklin Adjustable vs. Ab Bond Inflation | Franklin Adjustable vs. Ab Municipal Bond | Franklin Adjustable vs. Blackrock Inflation Protected |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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