Correlation Between Franklin Government and State Street
Can any of the company-specific risk be diversified away by investing in both Franklin Government and State Street 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 State Street 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 State Street Aggregate, you can compare the effects of market volatilities on Franklin Government and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and State Street.
Diversification Opportunities for Franklin Government and State Street
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and State is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and State Street Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Aggregate 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Aggregate has no effect on the direction of Franklin Government i.e., Franklin Government and State Street go up and down completely randomly.
Pair Corralation between Franklin Government and State Street
Assuming the 90 days horizon Franklin Government Money is expected to generate 0.33 times more return on investment than State Street. However, Franklin Government Money is 3.06 times less risky than State Street. It trades about 0.13 of its potential returns per unit of risk. State Street Aggregate is currently generating about 0.04 per unit of risk. If you would invest 92.00 in Franklin Government Money on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Franklin Government Money or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Government Money vs. State Street Aggregate
Performance |
| Timeline |
| Franklin Government Money |
| State Street Aggregate |
Franklin Government and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and State Street
The main advantage of trading using opposite Franklin Government and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Dws Government Money | State Street vs. Franklin Government Money | State Street vs. Cref Money Market | State Street vs. The Gabelli Money |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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