Correlation Between Franklin Government and General Money
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.21% |
Values | Daily Returns |
Franklin Government Money vs. General Money Market
Performance |
Timeline |
Franklin Government Money |
General Money Market |
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.Franklin Government vs. Buffalo High Yield | Franklin Government vs. Fidelity Capital Income | Franklin Government vs. T Rowe Price | Franklin Government vs. Prudential High Yield |
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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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