Correlation Between Franklin Federal and Harbor International
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Harbor International 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 Harbor International 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 Harbor International Small, you can compare the effects of market volatilities on Franklin Federal and Harbor International 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 Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Harbor International.
Diversification Opportunities for Franklin Federal and Harbor International
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Harbor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Harbor International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International 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 Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Franklin Federal i.e., Franklin Federal and Harbor International go up and down completely randomly.
Pair Corralation between Franklin Federal and Harbor International
Assuming the 90 days horizon Franklin Federal is expected to generate 1.49 times less return on investment than Harbor International. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.58 times less risky than Harbor International. It trades about 0.15 of its potential returns per unit of risk. Harbor International Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,316 in Harbor International Small on September 12, 2024 and sell it today you would earn a total of 142.00 from holding Harbor International Small or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Harbor International Small
Performance |
| Timeline |
| Franklin Federal Lim |
| Harbor International |
Franklin Federal and Harbor International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Harbor International
The main advantage of trading using opposite Franklin Federal and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Harbor International 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 Harbor International will offset losses from the drop in Harbor International'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 |
| Harbor International vs. Franklin Federal Limited Term | Harbor International vs. Delaware Investments Ultrashort | Harbor International vs. Lord Abbett Short | Harbor International vs. Touchstone Ultra Short |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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