Correlation Between Franklin Natural and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Oklahoma 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 Natural and Oklahoma Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Natural Resources and Oklahoma Municipal Fund, you can compare the effects of market volatilities on Franklin Natural and Oklahoma 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 Natural with a short position of Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Oklahoma Municipal.
Diversification Opportunities for Franklin Natural and Oklahoma Municipal
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Oklahoma is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal and Franklin Natural 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 Natural Resources are associated (or correlated) with Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Franklin Natural i.e., Franklin Natural and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between Franklin Natural and Oklahoma Municipal
Assuming the 90 days horizon Franklin Natural Resources is expected to under-perform the Oklahoma Municipal. In addition to that, Franklin Natural is 6.83 times more volatile than Oklahoma Municipal Fund. It trades about -0.1 of its total potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.4 per unit of volatility. If you would invest 1,055 in Oklahoma Municipal Fund on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Oklahoma Municipal Fund or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Oklahoma Municipal Fund
Performance |
| Timeline |
| Franklin Natural Res |
| Oklahoma Municipal |
Franklin Natural and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Oklahoma Municipal
The main advantage of trading using opposite Franklin Natural and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Oklahoma 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 Oklahoma Municipal will offset losses from the drop in Oklahoma Municipal's long position.| Franklin Natural vs. Vanguard Financials Index | Franklin Natural vs. Prudential Jennison Financial | Franklin Natural vs. John Hancock Financial | Franklin Natural vs. Mesirow Financial Small |
| Oklahoma Municipal vs. Gamco Natural Resources | Oklahoma Municipal vs. Fidelity Advisor Energy | Oklahoma Municipal vs. Jennison Natural Resources | Oklahoma Municipal vs. Franklin Natural Resources |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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