Correlation Between Franklin Real and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin Real and High-yield 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 Real and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Real Estate and High Yield Municipal Fund, you can compare the effects of market volatilities on Franklin Real and High-yield 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 Real with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and High-yield Municipal.
Diversification Opportunities for Franklin Real and High-yield Municipal
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FRANKLIN and High-yield is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Franklin Real 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 Real Estate are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Franklin Real i.e., Franklin Real and High-yield Municipal go up and down completely randomly.
Pair Corralation between Franklin Real and High-yield Municipal
Assuming the 90 days horizon Franklin Real Estate is expected to generate 3.37 times more return on investment than High-yield Municipal. However, Franklin Real is 3.37 times more volatile than High Yield Municipal Fund. It trades about 0.16 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.14 per unit of risk. If you would invest 1,622 in Franklin Real Estate on September 3, 2024 and sell it today you would earn a total of 365.00 from holding Franklin Real Estate or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. High Yield Municipal Fund
Performance |
| Timeline |
| Franklin Real Estate |
| High Yield Municipal |
Franklin Real and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and High-yield Municipal
The main advantage of trading using opposite Franklin Real and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, High-yield 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |