Correlation Between Franklin Federal and Income Fund
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Income 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 Federal and Income Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Income Fund Of, you can compare the effects of market volatilities on Franklin Federal and Income 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 Federal with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Income Fund.
Diversification Opportunities for Franklin Federal and Income Fund
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FRANKLIN and Income is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Franklin Federal i.e., Franklin Federal and Income Fund go up and down completely randomly.
Pair Corralation between Franklin Federal and Income Fund
Assuming the 90 days horizon Franklin Federal is expected to generate 2.63 times less return on investment than Income Fund. But when comparing it to its historical volatility, Franklin Federal Limited Term is 4.58 times less risky than Income Fund. It trades about 0.14 of its potential returns per unit of risk. Income Fund Of is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,163 in Income Fund Of on September 3, 2024 and sell it today you would earn a total of 462.00 from holding Income Fund Of or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Income Fund Of
Performance |
| Timeline |
| Franklin Federal Lim |
| Income Fund |
Franklin Federal and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Income Fund
The main advantage of trading using opposite Franklin Federal and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Income 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 Income Fund will offset losses from the drop in Income Fund's long position.| Franklin Federal vs. Alpine High Yield | Franklin Federal vs. Guggenheim High Yield | Franklin Federal vs. Blackrock High Yield | Franklin Federal vs. Pace High Yield |
| Income Fund vs. T Rowe Price | Income Fund vs. Nuveen High Income | Income Fund vs. Siit High Yield | Income Fund vs. Goldman Sachs High |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |