Correlation Between Franklin Necticut and Franklin New
Can any of the company-specific risk be diversified away by investing in both Franklin Necticut and Franklin New 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 New 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 New Jersey, you can compare the effects of market volatilities on Franklin Necticut and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Necticut and Franklin New.
Diversification Opportunities for Franklin Necticut and Franklin New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Necticut Tax Free and Franklin New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New Jersey 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New Jersey has no effect on the direction of Franklin Necticut i.e., Franklin Necticut and Franklin New go up and down completely randomly.
Pair Corralation between Franklin Necticut and Franklin New
Assuming the 90 days horizon Franklin Necticut Tax Free is expected to generate 1.18 times more return on investment than Franklin New. However, Franklin Necticut is 1.18 times more volatile than Franklin New Jersey. It trades about 0.16 of its potential returns per unit of risk. Franklin New Jersey is currently generating about 0.15 per unit of risk. If you would invest 909.00 in Franklin Necticut Tax Free on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Necticut Tax Free or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Necticut Tax Free vs. Franklin New Jersey
Performance |
| Timeline |
| Franklin Necticut Tax |
| Franklin New Jersey |
Franklin Necticut and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Necticut and Franklin New
The main advantage of trading using opposite Franklin Necticut and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Necticut position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Franklin Necticut vs. Franklin Mutual Beacon | Franklin Necticut vs. Franklin Mutual Global | Franklin Necticut vs. Franklin Mutual Global | Franklin Necticut vs. Franklin Mutual Global |
| Franklin New vs. Old Westbury Short Term | Franklin New vs. Ab Select Longshort | Franklin New vs. Sterling Capital Short | Franklin New vs. Angel Oak Ultrashort |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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