Correlation Between Franklin Liberty and JPMorgan Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin Liberty and JPMorgan Municipal 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 Liberty and JPMorgan Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Liberty Federal and JPMorgan Municipal, you can compare the effects of market volatilities on Franklin Liberty and JPMorgan Municipal 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 Liberty with a short position of JPMorgan Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Liberty and JPMorgan Municipal.
Diversification Opportunities for Franklin Liberty and JPMorgan Municipal
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and JPMorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Liberty Federal and JPMorgan Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Municipal and Franklin Liberty 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 Liberty Federal are associated (or correlated) with JPMorgan Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Municipal has no effect on the direction of Franklin Liberty i.e., Franklin Liberty and JPMorgan Municipal go up and down completely randomly.
Pair Corralation between Franklin Liberty and JPMorgan Municipal
Given the investment horizon of 90 days Franklin Liberty Federal is expected to generate 1.45 times more return on investment than JPMorgan Municipal. However, Franklin Liberty is 1.45 times more volatile than JPMorgan Municipal. It trades about 0.12 of its potential returns per unit of risk. JPMorgan Municipal is currently generating about 0.12 per unit of risk. If you would invest 2,341 in Franklin Liberty Federal on September 5, 2024 and sell it today you would earn a total of 101.00 from holding Franklin Liberty Federal or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Franklin Liberty Federal vs. JPMorgan Municipal
Performance |
| Timeline |
| Franklin Liberty Federal |
| JPMorgan Municipal |
Franklin Liberty and JPMorgan Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Liberty and JPMorgan Municipal
The main advantage of trading using opposite Franklin Liberty and JPMorgan Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Liberty position performs unexpectedly, JPMorgan Municipal 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 JPMorgan Municipal will offset losses from the drop in JPMorgan Municipal's long position.| Franklin Liberty vs. Franklin Liberty Intermediate | Franklin Liberty vs. IQ MacKay Municipal | Franklin Liberty vs. Xtrackers Municipal Infrastructure | Franklin Liberty vs. Hartford Municipal Opportunities |
| JPMorgan Municipal vs. JPMorgan Ultra Short Municipal | JPMorgan Municipal vs. JPMorgan USD Emerging | JPMorgan Municipal vs. iShares Short Maturity | JPMorgan Municipal vs. IQ MacKay Municipal |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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