Correlation Between Franklin Missouri and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Missouri and Western Asset 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 Missouri and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Missouri Tax Free and Western Asset Diversified, you can compare the effects of market volatilities on Franklin Missouri and Western Asset 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 Missouri with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Missouri and Western Asset.
Diversification Opportunities for Franklin Missouri and Western Asset
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Western is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Missouri Tax Free and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Franklin Missouri 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 Missouri Tax Free are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Franklin Missouri i.e., Franklin Missouri and Western Asset go up and down completely randomly.
Pair Corralation between Franklin Missouri and Western Asset
Assuming the 90 days horizon Franklin Missouri Tax Free is expected to generate 0.83 times more return on investment than Western Asset. However, Franklin Missouri Tax Free is 1.21 times less risky than Western Asset. It trades about 0.13 of its potential returns per unit of risk. Western Asset Diversified is currently generating about -0.02 per unit of risk. If you would invest 1,022 in Franklin Missouri Tax Free on September 3, 2024 and sell it today you would earn a total of 38.00 from holding Franklin Missouri Tax Free or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Missouri Tax Free vs. Western Asset Diversified
Performance |
| Timeline |
| Franklin Missouri Tax |
| Western Asset Diversified |
Franklin Missouri and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Missouri and Western Asset
The main advantage of trading using opposite Franklin Missouri and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Missouri position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Franklin Missouri vs. Baird Smallmid Cap | Franklin Missouri vs. Rbc Small Cap | Franklin Missouri vs. Chartwell Small Cap | Franklin Missouri vs. Artisan Small Cap |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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