Correlation Between Franklin Federal and Dreyfus Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Dreyfus Strategic 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 Dreyfus Strategic 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 Dreyfus Strategic Value, you can compare the effects of market volatilities on Franklin Federal and Dreyfus Strategic 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 Dreyfus Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Dreyfus Strategic.
Diversification Opportunities for Franklin Federal and Dreyfus Strategic
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Dreyfus is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Dreyfus Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Strategic Value 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 Dreyfus Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Strategic Value has no effect on the direction of Franklin Federal i.e., Franklin Federal and Dreyfus Strategic go up and down completely randomly.
Pair Corralation between Franklin Federal and Dreyfus Strategic
Assuming the 90 days horizon Franklin Federal is expected to generate 2.78 times less return on investment than Dreyfus Strategic. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.57 times less risky than Dreyfus Strategic. It trades about 0.11 of its potential returns per unit of risk. Dreyfus Strategic Value is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,935 in Dreyfus Strategic Value on October 23, 2024 and sell it today you would earn a total of 656.00 from holding Dreyfus Strategic Value or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Dreyfus Strategic Value
Performance |
| Timeline |
| Franklin Federal Lim |
| Dreyfus Strategic Value |
Franklin Federal and Dreyfus Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Dreyfus Strategic
The main advantage of trading using opposite Franklin Federal and Dreyfus Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Dreyfus Strategic 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 Dreyfus Strategic will offset losses from the drop in Dreyfus Strategic's long position.| Franklin Federal vs. Blrc Sgy Mnp | Franklin Federal vs. Nuveen Strategic Municipal | Franklin Federal vs. Barings High Yield | Franklin Federal vs. Gmo High Yield |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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