Correlation Between Franklin California and Deutsche California
Can any of the company-specific risk be diversified away by investing in both Franklin California and Deutsche California 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 California and Deutsche California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California Tax Free and Deutsche California Tax Free, you can compare the effects of market volatilities on Franklin California and Deutsche California 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 California with a short position of Deutsche California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Deutsche California.
Diversification Opportunities for Franklin California and Deutsche California
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Deutsche is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California Tax Free and Deutsche California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche California Tax and Franklin California 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 California Tax Free are associated (or correlated) with Deutsche California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche California Tax has no effect on the direction of Franklin California i.e., Franklin California and Deutsche California go up and down completely randomly.
Pair Corralation between Franklin California and Deutsche California
Assuming the 90 days horizon Franklin California Tax Free is expected to generate 1.01 times more return on investment than Deutsche California. However, Franklin California is 1.01 times more volatile than Deutsche California Tax Free. It trades about -0.05 of its potential returns per unit of risk. Deutsche California Tax Free is currently generating about -0.05 per unit of risk. If you would invest 695.00 in Franklin California Tax Free on August 29, 2024 and sell it today you would lose (5.00) from holding Franklin California Tax Free or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California Tax Free vs. Deutsche California Tax Free
Performance |
| Timeline |
| Franklin California Tax |
| Deutsche California Tax |
Franklin California and Deutsche California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Deutsche California
The main advantage of trading using opposite Franklin California and Deutsche California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Deutsche California 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 Deutsche California will offset losses from the drop in Deutsche California's long position.| Franklin California vs. Federated Government Ultrashort | Franklin California vs. Gamco Global Telecommunications | Franklin California vs. T Rowe Price | Franklin California vs. Bbh Intermediate Municipal |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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