Correlation Between Franklin Government and General Money

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Can any of the company-specific risk be diversified away by investing in both Franklin Government and General Money 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 Government and General Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and General Money Market, you can compare the effects of market volatilities on Franklin Government and General Money 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 Government with a short position of General Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and General Money.

Diversification Opportunities for Franklin Government and General Money

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Franklin and General is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and General Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Money Market and Franklin Government 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 Government Money are associated (or correlated) with General Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Money Market has no effect on the direction of Franklin Government i.e., Franklin Government and General Money go up and down completely randomly.

Pair Corralation between Franklin Government and General Money

Assuming the 90 days horizon Franklin Government is expected to generate 1.18 times less return on investment than General Money. But when comparing it to its historical volatility, Franklin Government Money is 6.37 times less risky than General Money. It trades about 0.13 of its potential returns per unit of risk. General Money Market is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  92.00  in General Money Market on September 12, 2024 and sell it today you would earn a total of  8.00  from holding General Money Market or generate 8.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.21%
ValuesDaily Returns

Franklin Government Money  vs.  General Money Market

 Performance 
       Timeline  
Franklin Government Money 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Government Money are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
General Money Market 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Money Market are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, General Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Government and General Money Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Government and General Money

The main advantage of trading using opposite Franklin Government and General Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, General Money 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 General Money will offset losses from the drop in General Money's long position.
The idea behind Franklin Government Money and General Money Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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