Correlation Between Franklin Arizona and Ab Arizona
Can any of the company-specific risk be diversified away by investing in both Franklin Arizona and Ab Arizona 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 Arizona and Ab Arizona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Arizona Tax Free and Ab Arizona Portfolio, you can compare the effects of market volatilities on Franklin Arizona and Ab Arizona 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 Arizona with a short position of Ab Arizona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Arizona and Ab Arizona.
Diversification Opportunities for Franklin Arizona and Ab Arizona
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and AAZAX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Arizona Tax Free and Ab Arizona Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Arizona Portfolio and Franklin Arizona 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 Arizona Tax Free are associated (or correlated) with Ab Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Arizona Portfolio has no effect on the direction of Franklin Arizona i.e., Franklin Arizona and Ab Arizona go up and down completely randomly.
Pair Corralation between Franklin Arizona and Ab Arizona
Assuming the 90 days horizon Franklin Arizona Tax Free is expected to generate 1.11 times more return on investment than Ab Arizona. However, Franklin Arizona is 1.11 times more volatile than Ab Arizona Portfolio. It trades about 0.14 of its potential returns per unit of risk. Ab Arizona Portfolio is currently generating about 0.15 per unit of risk. If you would invest 957.00 in Franklin Arizona Tax Free on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Franklin Arizona Tax Free or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Arizona Tax Free vs. Ab Arizona Portfolio
Performance |
| Timeline |
| Franklin Arizona Tax |
| Ab Arizona Portfolio |
Franklin Arizona and Ab Arizona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Arizona and Ab Arizona
The main advantage of trading using opposite Franklin Arizona and Ab Arizona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Arizona position performs unexpectedly, Ab Arizona 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 Ab Arizona will offset losses from the drop in Ab Arizona's long position.| Franklin Arizona vs. Franklin Mutual Beacon | Franklin Arizona vs. Templeton Developing Markets | Franklin Arizona vs. Franklin Mutual Global | Franklin Arizona vs. Franklin Mutual Global |
| Ab Arizona vs. Ab Global E | Ab Arizona vs. Ab Global E | Ab Arizona vs. Ab Global E | Ab Arizona vs. Ab Minnesota Portfolio |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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