Correlation Between Franklin Adjustable and Us Government
Can any of the company-specific risk be diversified away by investing in both Franklin Adjustable and Us 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 Us 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 Us Government Securities, you can compare the effects of market volatilities on Franklin Adjustable and Us 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Adjustable and Us Government.
Diversification Opportunities for Franklin Adjustable and Us Government
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and RGVCX is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Adjustable Government and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Franklin Adjustable i.e., Franklin Adjustable and Us Government go up and down completely randomly.
Pair Corralation between Franklin Adjustable and Us Government
Assuming the 90 days horizon Franklin Adjustable is expected to generate 1.08 times less return on investment than Us Government. But when comparing it to its historical volatility, Franklin Adjustable Government is 2.76 times less risky than Us Government. It trades about 0.17 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,164 in Us Government Securities on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Us Government Securities or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Adjustable Government vs. Us Government Securities
Performance |
| Timeline |
| Franklin Adjustable |
| Us Government Securities |
Franklin Adjustable and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Adjustable and Us Government
The main advantage of trading using opposite Franklin Adjustable and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Adjustable position performs unexpectedly, Us 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 Us Government will offset losses from the drop in Us Government's long position.| Franklin Adjustable vs. Eaton Vance Short | Franklin Adjustable vs. Vanguard Short Term Treasury | Franklin Adjustable vs. Vanguard Short Term Treasury | Franklin Adjustable vs. Vanguard Short Term Federal |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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