Correlation Between First Trust and Franklin High
Can any of the company-specific risk be diversified away by investing in both First Trust and Franklin High 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 First Trust and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Preferred and Franklin High Yield, you can compare the effects of market volatilities on First Trust and Franklin High 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 First Trust with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Franklin High.
Diversification Opportunities for First Trust and Franklin High
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and First Trust 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 First Trust Preferred are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of First Trust i.e., First Trust and Franklin High go up and down completely randomly.
Pair Corralation between First Trust and Franklin High
Assuming the 90 days horizon First Trust Preferred is expected to generate 1.36 times more return on investment than Franklin High. However, First Trust is 1.36 times more volatile than Franklin High Yield. It trades about 0.08 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.08 per unit of risk. If you would invest 1,721 in First Trust Preferred on September 3, 2024 and sell it today you would earn a total of 283.00 from holding First Trust Preferred or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Preferred vs. Franklin High Yield
Performance |
| Timeline |
| First Trust Preferred |
| Franklin High Yield |
First Trust and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Franklin High
The main advantage of trading using opposite First Trust and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Franklin High 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 Franklin High will offset losses from the drop in Franklin High's long position.| First Trust vs. Elfun Government Money | First Trust vs. Wilmington Funds | First Trust vs. Blackrock Exchange Portfolio | First Trust vs. Transamerica Funds |
| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Positions Ratings 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 | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |