Correlation Between Franklin and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin and Pace 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 and Pace Municipal 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 Pace Municipal Fixed, you can compare the effects of market volatilities on Franklin and Pace 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 with a short position of Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Pace Municipal.
Diversification Opportunities for Franklin and Pace Municipal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and Pace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Franklin i.e., Franklin and Pace Municipal go up and down completely randomly.
Pair Corralation between Franklin and Pace Municipal
Assuming the 90 days horizon Franklin Government Money is expected to generate 0.78 times more return on investment than Pace Municipal. However, Franklin Government Money is 1.28 times less risky than Pace Municipal. It trades about 0.13 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.01 per unit of risk. If you would invest 96.00 in Franklin Government Money on October 17, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Government Money or generate 4.17% 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. Pace Municipal Fixed
Performance |
| Timeline |
| Franklin Government Money |
| Pace Municipal Fixed |
Franklin and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Pace Municipal
The main advantage of trading using opposite Franklin and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Pace 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Franklin vs. Nasdaq 100 Profund Nasdaq 100 | Franklin vs. Us Vector Equity | Franklin vs. Alternative Asset Allocation | Franklin vs. Rbb Fund |
| Pace Municipal vs. California Municipal Portfolio | Pace Municipal vs. Morningstar Municipal Bond | Pace Municipal vs. Dws Government Money | Pace Municipal vs. Transamerica Intermediate Muni |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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