Correlation Between Franklin Necticut and Franklin Low
Can any of the company-specific risk be diversified away by investing in both Franklin Necticut and Franklin Low 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 Necticut and Franklin Low 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 Low Duration, you can compare the effects of market volatilities on Franklin Necticut and Franklin Low 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 Necticut with a short position of Franklin Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Necticut and Franklin Low.
Diversification Opportunities for Franklin Necticut and Franklin Low
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Necticut Tax Free and Franklin Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Low Duration and Franklin Necticut 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 Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Low Duration has no effect on the direction of Franklin Necticut i.e., Franklin Necticut and Franklin Low go up and down completely randomly.
Pair Corralation between Franklin Necticut and Franklin Low
Assuming the 90 days horizon Franklin Necticut is expected to generate 1.31 times less return on investment than Franklin Low. In addition to that, Franklin Necticut is 1.79 times more volatile than Franklin Low Duration. It trades about 0.06 of its total potential returns per unit of risk. Franklin Low Duration is currently generating about 0.13 per unit of volatility. If you would invest 812.00 in Franklin Low Duration on August 26, 2024 and sell it today you would earn a total of 87.00 from holding Franklin Low Duration or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Necticut Tax Free vs. Franklin Low Duration
Performance |
| Timeline |
| Franklin Necticut Tax |
| Franklin Low Duration |
Franklin Necticut and Franklin Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Necticut and Franklin Low
The main advantage of trading using opposite Franklin Necticut and Franklin Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Necticut position performs unexpectedly, Franklin Low 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 Low will offset losses from the drop in Franklin Low's long position.| Franklin Necticut vs. Franklin Mutual Beacon | Franklin Necticut vs. Templeton Developing Markets | Franklin Necticut vs. Franklin Mutual Global | Franklin Necticut vs. Franklin Mutual Global |
| Franklin Low vs. Franklin Mutual Beacon | Franklin Low vs. Templeton Developing Markets | Franklin Low vs. Franklin Mutual Global | Franklin Low vs. Franklin Mutual Global |
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 CEOs Directory module to screen CEOs from public companies around the world.
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