Correlation Between Franklin Federal and Federated Short-intermedia
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Federated Short-intermedia 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 Federated Short-intermedia 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 Federated Short Intermediate Duration, you can compare the effects of market volatilities on Franklin Federal and Federated Short-intermedia 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 Federated Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Federated Short-intermedia.
Diversification Opportunities for Franklin Federal and Federated Short-intermedia
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Federated Short Intermediate D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short-intermedia 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 Federated Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short-intermedia has no effect on the direction of Franklin Federal i.e., Franklin Federal and Federated Short-intermedia go up and down completely randomly.
Pair Corralation between Franklin Federal and Federated Short-intermedia
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 1.0 times more return on investment than Federated Short-intermedia. However, Franklin Federal is 1.0 times more volatile than Federated Short Intermediate Duration. It trades about 0.14 of its potential returns per unit of risk. Federated Short Intermediate Duration is currently generating about 0.13 per unit of risk. If you would invest 959.00 in Franklin Federal Limited Term on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Franklin Federal Limited Term or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Federated Short Intermediate D
Performance |
| Timeline |
| Franklin Federal Lim |
| Federated Short-intermedia |
Franklin Federal and Federated Short-intermedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Federated Short-intermedia
The main advantage of trading using opposite Franklin Federal and Federated Short-intermedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Federated Short-intermedia 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 Federated Short-intermedia will offset losses from the drop in Federated Short-intermedia'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 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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