Correlation Between Franklin Government and Blackrock Advantage
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Blackrock Advantage 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 Blackrock Advantage 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 Blackrock Advantage Large, you can compare the effects of market volatilities on Franklin Government and Blackrock Advantage 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 Blackrock Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Blackrock Advantage.
Diversification Opportunities for Franklin Government and Blackrock Advantage
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Blackrock is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Blackrock Advantage Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Large 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 Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Large has no effect on the direction of Franklin Government i.e., Franklin Government and Blackrock Advantage go up and down completely randomly.
Pair Corralation between Franklin Government and Blackrock Advantage
Assuming the 90 days horizon Franklin Government is expected to generate 3.39 times less return on investment than Blackrock Advantage. But when comparing it to its historical volatility, Franklin Government Money is 7.18 times less risky than Blackrock Advantage. It trades about 0.13 of its potential returns per unit of risk. Blackrock Advantage Large is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,214 in Blackrock Advantage Large on September 12, 2024 and sell it today you would earn a total of 72.00 from holding Blackrock Advantage Large or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Franklin Government Money vs. Blackrock Advantage Large
Performance |
| Timeline |
| Franklin Government Money |
| Blackrock Advantage Large |
Franklin Government and Blackrock Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Blackrock Advantage
The main advantage of trading using opposite Franklin Government and Blackrock Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Blackrock Advantage 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 Blackrock Advantage will offset losses from the drop in Blackrock Advantage's long position.| Franklin Government vs. Jpmorgan High Yield | Franklin Government vs. Janus High Yield Fund | Franklin Government vs. Gmo High Yield | Franklin Government vs. Guggenheim High Yield |
| Blackrock Advantage vs. Gmo Global Equity | Blackrock Advantage vs. Artisan Select Equity | Blackrock Advantage vs. Scharf Fund Retail | Blackrock Advantage vs. Dodge International Stock |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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