Correlation Between Franklin Equity and Franklin Minnesota
Can any of the company-specific risk be diversified away by investing in both Franklin Equity and Franklin Minnesota 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 Equity and Franklin Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Equity Income and Franklin Minnesota Tax Free, you can compare the effects of market volatilities on Franklin Equity and Franklin Minnesota 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 Equity with a short position of Franklin Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and Franklin Minnesota.
Diversification Opportunities for Franklin Equity and Franklin Minnesota
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Franklin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and Franklin Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Minnesota Tax and Franklin Equity 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 Equity Income are associated (or correlated) with Franklin Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Minnesota Tax has no effect on the direction of Franklin Equity i.e., Franklin Equity and Franklin Minnesota go up and down completely randomly.
Pair Corralation between Franklin Equity and Franklin Minnesota
Assuming the 90 days horizon Franklin Equity Income is expected to generate 2.08 times more return on investment than Franklin Minnesota. However, Franklin Equity is 2.08 times more volatile than Franklin Minnesota Tax Free. It trades about 0.31 of its potential returns per unit of risk. Franklin Minnesota Tax Free is currently generating about 0.22 per unit of risk. If you would invest 3,430 in Franklin Equity Income on September 1, 2024 and sell it today you would earn a total of 172.00 from holding Franklin Equity Income or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Equity Income vs. Franklin Minnesota Tax Free
Performance |
| Timeline |
| Franklin Equity Income |
| Franklin Minnesota Tax |
Franklin Equity and Franklin Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Equity and Franklin Minnesota
The main advantage of trading using opposite Franklin Equity and Franklin Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Equity position performs unexpectedly, Franklin Minnesota 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 Minnesota will offset losses from the drop in Franklin Minnesota's long position.| Franklin Equity vs. Franklin Mutual Beacon | Franklin Equity vs. Templeton Developing Markets | Franklin Equity vs. Franklin Mutual Global | Franklin Equity vs. Franklin Mutual Global |
| Franklin Minnesota vs. Franklin Mutual Beacon | Franklin Minnesota vs. Templeton Developing Markets | Franklin Minnesota vs. Franklin Mutual Global | Franklin Minnesota 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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