Correlation Between Franklin California and Ab Global
Can any of the company-specific risk be diversified away by investing in both Franklin California and Ab Global 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 California and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin California Tax Free and Ab Global Risk, you can compare the effects of market volatilities on Franklin California and Ab Global 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 California with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Ab Global.
Diversification Opportunities for Franklin California and Ab Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and CABIX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California Tax Free and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Franklin California 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 California Tax Free are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Franklin California i.e., Franklin California and Ab Global go up and down completely randomly.
Pair Corralation between Franklin California and Ab Global
Assuming the 90 days horizon Franklin California Tax Free is expected to generate 0.34 times more return on investment than Ab Global. However, Franklin California Tax Free is 2.92 times less risky than Ab Global. It trades about 0.06 of its potential returns per unit of risk. Ab Global Risk is currently generating about 0.01 per unit of risk. If you would invest 630.00 in Franklin California Tax Free on November 27, 2024 and sell it today you would earn a total of 53.00 from holding Franklin California Tax Free or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California Tax Free vs. Ab Global Risk
Performance |
| Timeline |
| Franklin California Tax |
| Ab Global Risk |
Franklin California and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Ab Global
The main advantage of trading using opposite Franklin California and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Ab Global 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 Global will offset losses from the drop in Ab Global's long position.| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California vs. Franklin Mutual Global |
| Ab Global vs. Dunham High Yield | Ab Global vs. Artisan High Income | Ab Global vs. Voya High Yield | Ab Global vs. Pace High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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