Correlation Between Franklin California and Tax-exempt Fund
Can any of the company-specific risk be diversified away by investing in both Franklin California and Tax-exempt Fund 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 Tax-exempt Fund 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 Tax Exempt Fund Of, you can compare the effects of market volatilities on Franklin California and Tax-exempt Fund 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 Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin California and Tax-exempt Fund.
Diversification Opportunities for Franklin California and Tax-exempt Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Tax-exempt is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin California Tax Free and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund 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 Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of Franklin California i.e., Franklin California and Tax-exempt Fund go up and down completely randomly.
Pair Corralation between Franklin California and Tax-exempt Fund
Assuming the 90 days horizon Franklin California Tax Free is expected to generate about the same return on investment as Tax Exempt Fund Of. However, Franklin California is 1.13 times more volatile than Tax Exempt Fund Of. It trades about 0.07 of its potential returns per unit of risk. Tax Exempt Fund Of is currently producing about 0.08 per unit of risk. If you would invest 1,555 in Tax Exempt Fund Of on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Tax Exempt Fund Of or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin California Tax Free vs. Tax Exempt Fund Of
Performance |
| Timeline |
| Franklin California Tax |
| Tax Exempt Fund |
Franklin California and Tax-exempt Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin California and Tax-exempt Fund
The main advantage of trading using opposite Franklin California and Tax-exempt Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin California position performs unexpectedly, Tax-exempt Fund 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 Tax-exempt Fund will offset losses from the drop in Tax-exempt Fund'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 |
| Tax-exempt Fund vs. Income Fund Of | Tax-exempt Fund vs. New World Fund | Tax-exempt Fund vs. American Mutual Fund | Tax-exempt Fund vs. American Mutual Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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