Correlation Between Franklin Federal and Deutsche Managed
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Deutsche Managed 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 Federal and Deutsche Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Tax Free and Deutsche Managed Municipal, you can compare the effects of market volatilities on Franklin Federal and Deutsche Managed 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 Federal with a short position of Deutsche Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Deutsche Managed.
Diversification Opportunities for Franklin Federal and Deutsche Managed
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Deutsche is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free and Deutsche Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Managed Mun and Franklin Federal 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 Federal Tax Free are associated (or correlated) with Deutsche Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Managed Mun has no effect on the direction of Franklin Federal i.e., Franklin Federal and Deutsche Managed go up and down completely randomly.
Pair Corralation between Franklin Federal and Deutsche Managed
Assuming the 90 days horizon Franklin Federal is expected to generate 1.5 times less return on investment than Deutsche Managed. But when comparing it to its historical volatility, Franklin Federal Tax Free is 1.06 times less risky than Deutsche Managed. It trades about 0.15 of its potential returns per unit of risk. Deutsche Managed Municipal is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 813.00 in Deutsche Managed Municipal on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Deutsche Managed Municipal or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Deutsche Managed Municipal
Performance |
| Timeline |
| Franklin Federal Tax |
| Deutsche Managed Mun |
Franklin Federal and Deutsche Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Deutsche Managed
The main advantage of trading using opposite Franklin Federal and Deutsche Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Deutsche Managed 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 Deutsche Managed will offset losses from the drop in Deutsche Managed's long position.| Franklin Federal vs. Cref Inflation Linked Bond | Franklin Federal vs. Western Asset Inflation | Franklin Federal vs. Asg Managed Futures | Franklin Federal vs. Oklahoma College Savings |
| Deutsche Managed vs. Legg Mason Bw | Deutsche Managed vs. T Rowe Price | Deutsche Managed vs. Aqr Large Cap | Deutsche Managed vs. Enhanced Large Pany |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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