Correlation Between Franklin Federal and Baron Select
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Baron Select 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 Baron Select 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 Baron Select Funds, you can compare the effects of market volatilities on Franklin Federal and Baron Select 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 Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Baron Select.
Diversification Opportunities for Franklin Federal and Baron Select
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Baron is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds 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 Baron Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Franklin Federal i.e., Franklin Federal and Baron Select go up and down completely randomly.
Pair Corralation between Franklin Federal and Baron Select
Assuming the 90 days horizon Franklin Federal is expected to generate 10.73 times less return on investment than Baron Select. But when comparing it to its historical volatility, Franklin Federal Limited Term is 14.92 times less risky than Baron Select. It trades about 0.15 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 952.00 in Baron Select Funds on August 29, 2024 and sell it today you would earn a total of 356.00 from holding Baron Select Funds or generate 37.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Baron Select Funds
Performance |
| Timeline |
| Franklin Federal Lim |
| Baron Select Funds |
Franklin Federal and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Baron Select
The main advantage of trading using opposite Franklin Federal and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Baron Select 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 Baron Select will offset losses from the drop in Baron Select's long position.The idea behind Franklin Federal Limited Term and Baron Select Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Baron Select vs. Franklin Federal Limited Term | Baron Select vs. Federated Short Intermediate Duration | Baron Select vs. Locorr Longshort Modities | Baron Select vs. Vanguard Short Term Federal |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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