Correlation Between Franklin and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Franklin and Prudential Government 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 and Prudential Government 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 Prudential Government Money, you can compare the effects of market volatilities on Franklin and Prudential Government 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 with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Prudential Government.
Diversification Opportunities for Franklin and Prudential Government
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Prudential is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Prudential Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Franklin 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 Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Franklin i.e., Franklin and Prudential Government go up and down completely randomly.
Pair Corralation between Franklin and Prudential Government
If you would invest 100.00 in Prudential Government Money on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Prudential Government Money or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Prudential Government Money
Performance |
| Timeline |
| Franklin Government Money |
| Prudential Government |
Franklin and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Prudential Government
The main advantage of trading using opposite Franklin and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Franklin vs. Aig Government Money | Franklin vs. Blackrock Government Bond | Franklin vs. John Hancock Government | Franklin vs. Dunham Porategovernment Bond |
| Prudential Government vs. Vanguard Total Stock | Prudential Government vs. Vanguard 500 Index | Prudential Government vs. Vanguard Total Stock | Prudential Government vs. Vanguard Total 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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