Correlation Between Franklin and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Franklin and Multisector Bond 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 and Multisector Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and Multisector Bond Sma, you can compare the effects of market volatilities on Franklin and Multisector Bond 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 with a short position of Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Multisector Bond.
Diversification Opportunities for Franklin and Multisector Bond
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and Multisector is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma and Franklin 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 Government Money are associated (or correlated) with Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Franklin i.e., Franklin and Multisector Bond go up and down completely randomly.
Pair Corralation between Franklin and Multisector Bond
Assuming the 90 days horizon Franklin is expected to generate 1.82 times less return on investment than Multisector Bond. But when comparing it to its historical volatility, Franklin Government Money is 2.49 times less risky than Multisector Bond. It trades about 0.13 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Multisector Bond Sma on October 17, 2024 and sell it today you would earn a total of 95.00 from holding Multisector Bond Sma or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Multisector Bond Sma
Performance |
| Timeline |
| Franklin Government Money |
| Multisector Bond Sma |
Franklin and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Multisector Bond
The main advantage of trading using opposite Franklin and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Franklin vs. Nasdaq 100 Profund Nasdaq 100 | Franklin vs. Us Vector Equity | Franklin vs. Alternative Asset Allocation | Franklin vs. Rbb Fund |
| Multisector Bond vs. Morningstar Defensive Bond | Multisector Bond vs. Intermediate Term Bond Fund | Multisector Bond vs. Dws Government Money | Multisector Bond vs. Western Asset 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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