Correlation Between Franklin Growth and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Invesco Municipal 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 Growth and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Opportunities and Invesco Municipal Income, you can compare the effects of market volatilities on Franklin Growth and Invesco Municipal 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 Growth with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Invesco Municipal.
Diversification Opportunities for Franklin Growth and Invesco Municipal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Invesco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Franklin Growth 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 Growth Opportunities are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of Franklin Growth i.e., Franklin Growth and Invesco Municipal go up and down completely randomly.
Pair Corralation between Franklin Growth and Invesco Municipal
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 4.39 times more return on investment than Invesco Municipal. However, Franklin Growth is 4.39 times more volatile than Invesco Municipal Income. It trades about 0.07 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.05 per unit of risk. If you would invest 4,199 in Franklin Growth Opportunities on August 27, 2024 and sell it today you would earn a total of 2,088 from holding Franklin Growth Opportunities or generate 49.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Invesco Municipal Income
Performance |
| Timeline |
| Franklin Growth Oppo |
| Invesco Municipal Income |
Franklin Growth and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Invesco Municipal
The main advantage of trading using opposite Franklin Growth and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Invesco Municipal 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 Invesco Municipal will offset losses from the drop in Invesco Municipal's long position.| Franklin Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth vs. Franklin Mutual Global |
| Invesco Municipal vs. Franklin Growth Opportunities | Invesco Municipal vs. Pace Smallmedium Growth | Invesco Municipal vs. Champlain Mid Cap | Invesco Municipal vs. Victory Rs Growth |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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