Correlation Between Franklin Federal and Voya Midcap
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Voya Midcap 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 Voya Midcap 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 Voya Midcap Opportunities, you can compare the effects of market volatilities on Franklin Federal and Voya Midcap 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 Voya Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Voya Midcap.
Diversification Opportunities for Franklin Federal and Voya Midcap
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Voya is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities 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 Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Franklin Federal i.e., Franklin Federal and Voya Midcap go up and down completely randomly.
Pair Corralation between Franklin Federal and Voya Midcap
Assuming the 90 days horizon Franklin Federal is expected to generate 5.55 times less return on investment than Voya Midcap. But when comparing it to its historical volatility, Franklin Federal Limited Term is 9.4 times less risky than Voya Midcap. It trades about 0.15 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Voya Midcap Opportunities on September 14, 2024 and sell it today you would earn a total of 134.00 from holding Voya Midcap Opportunities or generate 51.54% 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. Voya Midcap Opportunities
Performance |
| Timeline |
| Franklin Federal Lim |
| Voya Midcap Opportunities |
Franklin Federal and Voya Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Voya Midcap
The main advantage of trading using opposite Franklin Federal and Voya Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Voya Midcap 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 Voya Midcap will offset losses from the drop in Voya Midcap'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 |
| Voya Midcap vs. Voya Bond Index | Voya Midcap vs. Voya Bond Index | Voya Midcap vs. Voya Limited Maturity | Voya Midcap vs. Voya Limited Maturity |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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