Correlation Between Banking Portfolio and Franklin California
Can any of the company-specific risk be diversified away by investing in both Banking Portfolio and Franklin California 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 Banking Portfolio and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Portfolio Banking and Franklin California High, you can compare the effects of market volatilities on Banking Portfolio and Franklin California 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 Banking Portfolio with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Portfolio and Franklin California.
Diversification Opportunities for Banking Portfolio and Franklin California
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banking and Franklin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Banking Portfolio Banking and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High and Banking Portfolio 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 Banking Portfolio Banking are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of Banking Portfolio i.e., Banking Portfolio and Franklin California go up and down completely randomly.
Pair Corralation between Banking Portfolio and Franklin California
Assuming the 90 days horizon Banking Portfolio Banking is expected to generate 9.07 times more return on investment than Franklin California. However, Banking Portfolio is 9.07 times more volatile than Franklin California High. It trades about 0.23 of its potential returns per unit of risk. Franklin California High is currently generating about 0.17 per unit of risk. If you would invest 3,107 in Banking Portfolio Banking on September 1, 2024 and sell it today you would earn a total of 443.00 from holding Banking Portfolio Banking or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Banking Portfolio Banking vs. Franklin California High
Performance |
| Timeline |
| Banking Portfolio Banking |
| Franklin California High |
Banking Portfolio and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Portfolio and Franklin California
The main advantage of trading using opposite Banking Portfolio and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Portfolio position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Banking Portfolio vs. Fidelity Freedom 2015 | Banking Portfolio vs. Fidelity Puritan Fund | Banking Portfolio vs. Fidelity Puritan Fund | Banking Portfolio vs. Fidelity Pennsylvania Municipal |
| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California vs. Franklin Mutual Global |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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