Correlation Between Federated Short and Franklin New
Can any of the company-specific risk be diversified away by investing in both Federated Short and Franklin New 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 Federated Short and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and Franklin New Jersey, you can compare the effects of market volatilities on Federated Short and Franklin New 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 Federated Short with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short and Franklin New.
Diversification Opportunities for Federated Short and Franklin New
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Franklin New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New Jersey and Federated Short 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 Federated Short Term Income are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New Jersey has no effect on the direction of Federated Short i.e., Federated Short and Franklin New go up and down completely randomly.
Pair Corralation between Federated Short and Franklin New
Assuming the 90 days horizon Federated Short is expected to generate 1.76 times less return on investment than Franklin New. But when comparing it to its historical volatility, Federated Short Term Income is 1.07 times less risky than Franklin New. It trades about 0.28 of its potential returns per unit of risk. Franklin New Jersey is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 1,036 in Franklin New Jersey on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Franklin New Jersey or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Franklin New Jersey
Performance |
| Timeline |
| Federated Short Term |
| Franklin New Jersey |
Federated Short and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short and Franklin New
The main advantage of trading using opposite Federated Short and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short position performs unexpectedly, Franklin New 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 Franklin New will offset losses from the drop in Franklin New's long position.| Federated Short vs. Federated Hermes Mdt | Federated Short vs. Federated Mdt Large | Federated Short vs. Federated High Income | Federated Short vs. Federated Hermes Sdg |
| Franklin New vs. Investec Emerging Markets | Franklin New vs. Rbc Emerging Markets | Franklin New vs. Dws Emerging Markets | Franklin New vs. Mid Cap 15x Strategy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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