Correlation Between Franklin Government and Kentucky Tax
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Kentucky Tax 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 Kentucky Tax 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 Kentucky Tax Free Income, you can compare the effects of market volatilities on Franklin Government and Kentucky Tax 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 Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Kentucky Tax.
Diversification Opportunities for Franklin Government and Kentucky Tax
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Kentucky is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Franklin Government i.e., Franklin Government and Kentucky Tax go up and down completely randomly.
Pair Corralation between Franklin Government and Kentucky Tax
Assuming the 90 days horizon Franklin Government is expected to generate 1.34 times less return on investment than Kentucky Tax. But when comparing it to its historical volatility, Franklin Government Money is 1.84 times less risky than Kentucky Tax. It trades about 0.12 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 682.00 in Kentucky Tax Free Income on September 12, 2024 and sell it today you would earn a total of 48.00 from holding Kentucky Tax Free Income or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Kentucky Tax Free Income
Performance |
| Timeline |
| Franklin Government Money |
| Kentucky Tax Free |
Franklin Government and Kentucky Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Kentucky Tax
The main advantage of trading using opposite Franklin Government and Kentucky Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Kentucky Tax 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 Kentucky Tax will offset losses from the drop in Kentucky Tax'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 |
| Kentucky Tax vs. Ubs Money Series | Kentucky Tax vs. Franklin Government Money | Kentucky Tax vs. Money Market Obligations | Kentucky Tax vs. Chestnut Street Exchange |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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