Correlation Between Franklin Federal and Nuveen Nebraska
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Nuveen Nebraska 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 Nuveen Nebraska 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 Nuveen Nebraska Municipal, you can compare the effects of market volatilities on Franklin Federal and Nuveen Nebraska 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 Nuveen Nebraska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Nuveen Nebraska.
Diversification Opportunities for Franklin Federal and Nuveen Nebraska
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Nuveen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Nuveen Nebraska Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Nebraska Municipal 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 Nuveen Nebraska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Nebraska Municipal has no effect on the direction of Franklin Federal i.e., Franklin Federal and Nuveen Nebraska go up and down completely randomly.
Pair Corralation between Franklin Federal and Nuveen Nebraska
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.46 times more return on investment than Nuveen Nebraska. However, Franklin Federal Limited Term is 2.15 times less risky than Nuveen Nebraska. It trades about 0.16 of its potential returns per unit of risk. Nuveen Nebraska Municipal is currently generating about 0.05 per unit of risk. If you would invest 994.00 in Franklin Federal Limited Term on September 14, 2024 and sell it today you would earn a total of 40.00 from holding Franklin Federal Limited Term or generate 4.02% 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. Nuveen Nebraska Municipal
Performance |
| Timeline |
| Franklin Federal Lim |
| Nuveen Nebraska Municipal |
Franklin Federal and Nuveen Nebraska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Nuveen Nebraska
The main advantage of trading using opposite Franklin Federal and Nuveen Nebraska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Nuveen Nebraska 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 Nuveen Nebraska will offset losses from the drop in Nuveen Nebraska's long position.| Franklin Federal vs. Alliancebernstein National Municipal | Franklin Federal vs. California High Yield Municipal | Franklin Federal vs. Gamco Global Telecommunications | Franklin Federal vs. T Rowe Price |
| Nuveen Nebraska vs. T Rowe Price | Nuveen Nebraska vs. Morningstar Unconstrained Allocation | Nuveen Nebraska vs. Rational Strategic Allocation | Nuveen Nebraska vs. Fm Investments Large |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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