Correlation Between Franklin Federal and Dreyfus Short
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Dreyfus Short 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 Short 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 Short Intermediate, you can compare the effects of market volatilities on Franklin Federal and Dreyfus Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Dreyfus Short.
Diversification Opportunities for Franklin Federal and Dreyfus Short
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Dreyfus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Franklin Federal i.e., Franklin Federal and Dreyfus Short go up and down completely randomly.
Pair Corralation between Franklin Federal and Dreyfus Short
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.96 times more return on investment than Dreyfus Short. However, Franklin Federal Limited Term is 1.05 times less risky than Dreyfus Short. It trades about 0.62 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.32 per unit of risk. If you would invest 1,029 in Franklin Federal Limited Term on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Federal Limited Term or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Dreyfus Short Intermediate
Performance |
| Timeline |
| Franklin Federal Lim |
| Dreyfus Short Interm |
Franklin Federal and Dreyfus Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Dreyfus Short
The main advantage of trading using opposite Franklin Federal and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Dreyfus Short 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 Short will offset losses from the drop in Dreyfus Short's long position.| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
| Dreyfus Short vs. Dreyfus High Yield | Dreyfus Short vs. Dreyfusthe Boston Pany | Dreyfus Short vs. Dreyfus International Bond | Dreyfus Short vs. Dreyfus International Bond |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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