Correlation Between Franklin Connecticut and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Franklin Connecticut and Franklin Federal 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 Connecticut and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Necticut Tax Free and Franklin Federal Limited Term, you can compare the effects of market volatilities on Franklin Connecticut and Franklin Federal 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 Connecticut with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Connecticut and Franklin Federal.
Diversification Opportunities for Franklin Connecticut and Franklin Federal
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and FRANKLIN is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Necticut Tax Free and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Franklin Connecticut 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 Necticut Tax Free are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Franklin Connecticut i.e., Franklin Connecticut and Franklin Federal go up and down completely randomly.
Pair Corralation between Franklin Connecticut and Franklin Federal
Assuming the 90 days horizon Franklin Necticut Tax Free is expected to generate 2.7 times more return on investment than Franklin Federal. However, Franklin Connecticut is 2.7 times more volatile than Franklin Federal Limited Term. It trades about 0.12 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.22 per unit of risk. If you would invest 890.00 in Franklin Necticut Tax Free on September 3, 2024 and sell it today you would earn a total of 36.00 from holding Franklin Necticut Tax Free or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Necticut Tax Free vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Franklin Necticut Tax |
| Franklin Federal Lim |
Franklin Connecticut and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Connecticut and Franklin Federal
The main advantage of trading using opposite Franklin Connecticut and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Connecticut position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Franklin Connecticut vs. Transamerica Financial Life | Franklin Connecticut vs. Davis Financial Fund | Franklin Connecticut vs. Fidelity Advisor Financial | Franklin Connecticut vs. Goldman Sachs Financial |
| Franklin Federal vs. Aqr Long Short Equity | Franklin Federal vs. Barings Active Short | Franklin Federal vs. Maryland Short Term Tax Free | Franklin Federal vs. Rbc Short Duration |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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