Correlation Between Franklin Federal and Guggenheim Floating
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Guggenheim Floating 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 Guggenheim Floating 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 Guggenheim Floating Rate, you can compare the effects of market volatilities on Franklin Federal and Guggenheim Floating 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 Guggenheim Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Guggenheim Floating.
Diversification Opportunities for Franklin Federal and Guggenheim Floating
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Guggenheim is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Guggenheim Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Floating Rate 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 Guggenheim Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Floating Rate has no effect on the direction of Franklin Federal i.e., Franklin Federal and Guggenheim Floating go up and down completely randomly.
Pair Corralation between Franklin Federal and Guggenheim Floating
Assuming the 90 days horizon Franklin Federal is expected to generate 1.54 times less return on investment than Guggenheim Floating. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.5 times less risky than Guggenheim Floating. It trades about 0.19 of its potential returns per unit of risk. Guggenheim Floating Rate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Guggenheim Floating Rate on September 12, 2024 and sell it today you would earn a total of 233.00 from holding Guggenheim Floating Rate or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Guggenheim Floating Rate
Performance |
| Timeline |
| Franklin Federal Lim |
| Guggenheim Floating Rate |
Franklin Federal and Guggenheim Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Guggenheim Floating
The main advantage of trading using opposite Franklin Federal and Guggenheim Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Guggenheim Floating 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 Guggenheim Floating will offset losses from the drop in Guggenheim Floating's long position.| Franklin Federal vs. Vanguard Limited Term Tax Exempt | Franklin Federal vs. SCOR PK | Franklin Federal vs. Morningstar Unconstrained Allocation | Franklin Federal vs. Via Renewables |
| Guggenheim Floating vs. Franklin Federal Limited Term | Guggenheim Floating vs. Alpine Ultra Short | Guggenheim Floating vs. Quantitative Longshort Equity | Guggenheim Floating vs. Aqr Long Short Equity |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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