Correlation Between Franklin Pennsylvania and Aim Taxexempt
Can any of the company-specific risk be diversified away by investing in both Franklin Pennsylvania and Aim Taxexempt 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 Pennsylvania and Aim Taxexempt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Pennsylvania Tax Free and Aim Taxexempt Funds, you can compare the effects of market volatilities on Franklin Pennsylvania and Aim Taxexempt 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 Pennsylvania with a short position of Aim Taxexempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Pennsylvania and Aim Taxexempt.
Diversification Opportunities for Franklin Pennsylvania and Aim Taxexempt
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Aim is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Pennsylvania Tax Free and Aim Taxexempt Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Taxexempt Funds and Franklin Pennsylvania 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 Pennsylvania Tax Free are associated (or correlated) with Aim Taxexempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Taxexempt Funds has no effect on the direction of Franklin Pennsylvania i.e., Franklin Pennsylvania and Aim Taxexempt go up and down completely randomly.
Pair Corralation between Franklin Pennsylvania and Aim Taxexempt
Assuming the 90 days horizon Franklin Pennsylvania is expected to generate 1.49 times less return on investment than Aim Taxexempt. But when comparing it to its historical volatility, Franklin Pennsylvania Tax Free is 1.02 times less risky than Aim Taxexempt. It trades about 0.07 of its potential returns per unit of risk. Aim Taxexempt Funds is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Aim Taxexempt Funds on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Aim Taxexempt Funds or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Pennsylvania Tax Free vs. Aim Taxexempt Funds
Performance |
| Timeline |
| Franklin Pennsylvania |
| Aim Taxexempt Funds |
Franklin Pennsylvania and Aim Taxexempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Pennsylvania and Aim Taxexempt
The main advantage of trading using opposite Franklin Pennsylvania and Aim Taxexempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Pennsylvania position performs unexpectedly, Aim Taxexempt 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 Aim Taxexempt will offset losses from the drop in Aim Taxexempt's long position.| Franklin Pennsylvania vs. Legg Mason Bw | Franklin Pennsylvania vs. Fundamental Large Cap | Franklin Pennsylvania vs. T Rowe Price | Franklin Pennsylvania vs. Qs Large Cap |
| Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Oppenheimer Rising Dividends |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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