Correlation Between Franklin Government and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Mainstay Epoch 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 Mainstay Epoch 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 Mainstay Epoch Small, you can compare the effects of market volatilities on Franklin Government and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Mainstay Epoch.
Diversification Opportunities for Franklin Government and Mainstay Epoch
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Mainstay is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Mainstay Epoch Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Small 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Small has no effect on the direction of Franklin Government i.e., Franklin Government and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Franklin Government and Mainstay Epoch
Assuming the 90 days horizon Franklin Government is expected to generate 3.63 times less return on investment than Mainstay Epoch. But when comparing it to its historical volatility, Franklin Government Money is 9.65 times less risky than Mainstay Epoch. It trades about 0.13 of its potential returns per unit of risk. Mainstay Epoch Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,604 in Mainstay Epoch Small on September 3, 2024 and sell it today you would earn a total of 483.00 from holding Mainstay Epoch Small or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Mainstay Epoch Small
Performance |
| Timeline |
| Franklin Government Money |
| Mainstay Epoch Small |
Franklin Government and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Mainstay Epoch
The main advantage of trading using opposite Franklin Government and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Mainstay Epoch 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 Mainstay Epoch will offset losses from the drop in Mainstay Epoch's long position.| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
| Mainstay Epoch vs. Kinetics Small Cap | Mainstay Epoch vs. Small Cap Value | Mainstay Epoch vs. Small Pany Growth | Mainstay Epoch vs. Artisan Small Cap |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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