Correlation Between Franklin Conservative and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Franklin Conservative and Pace Municipal 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 Conservative and Pace Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Servative Allocation and Pace Municipal Fixed, you can compare the effects of market volatilities on Franklin Conservative and Pace Municipal 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 Conservative with a short position of Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Conservative and Pace Municipal.
Diversification Opportunities for Franklin Conservative and Pace Municipal
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Pace is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Servative Allocation and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed and Franklin Conservative 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 Servative Allocation are associated (or correlated) with Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Franklin Conservative i.e., Franklin Conservative and Pace Municipal go up and down completely randomly.
Pair Corralation between Franklin Conservative and Pace Municipal
Assuming the 90 days horizon Franklin Servative Allocation is expected to generate 2.59 times more return on investment than Pace Municipal. However, Franklin Conservative is 2.59 times more volatile than Pace Municipal Fixed. It trades about 0.12 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about -0.02 per unit of risk. If you would invest 1,398 in Franklin Servative Allocation on October 26, 2024 and sell it today you would earn a total of 14.00 from holding Franklin Servative Allocation or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Servative Allocation vs. Pace Municipal Fixed
Performance |
| Timeline |
| Franklin Conservative |
| Pace Municipal Fixed |
Franklin Conservative and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Conservative and Pace Municipal
The main advantage of trading using opposite Franklin Conservative and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Conservative position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Franklin Conservative vs. Pace Municipal Fixed | Franklin Conservative vs. Nuveen Missouri Municipal | Franklin Conservative vs. Intermediate Term Tax Free Bond | Franklin Conservative vs. Ab Bond Inflation |
| Pace Municipal vs. Siit Equity Factor | Pace Municipal vs. Locorr Dynamic Equity | Pace Municipal vs. Greenspring Fund Retail | Pace Municipal vs. Doubleline Core Fixed |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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