Correlation Between Franklin Federal and Balanced Portfolio
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Balanced Portfolio 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 Balanced Portfolio 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 Balanced Portfolio Institutional, you can compare the effects of market volatilities on Franklin Federal and Balanced Portfolio 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 Balanced Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Balanced Portfolio.
Diversification Opportunities for Franklin Federal and Balanced Portfolio
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Balanced is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Balanced Portfolio Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Portfolio 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 Balanced Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Portfolio has no effect on the direction of Franklin Federal i.e., Franklin Federal and Balanced Portfolio go up and down completely randomly.
Pair Corralation between Franklin Federal and Balanced Portfolio
Assuming the 90 days horizon Franklin Federal is expected to generate 3.62 times less return on investment than Balanced Portfolio. But when comparing it to its historical volatility, Franklin Federal Limited Term is 5.06 times less risky than Balanced Portfolio. It trades about 0.16 of its potential returns per unit of risk. Balanced Portfolio Institutional is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,288 in Balanced Portfolio Institutional on September 12, 2024 and sell it today you would earn a total of 1,010 from holding Balanced Portfolio Institutional or generate 23.55% 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. Balanced Portfolio Institution
Performance |
| Timeline |
| Franklin Federal Lim |
| Balanced Portfolio |
Franklin Federal and Balanced Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Balanced Portfolio
The main advantage of trading using opposite Franklin Federal and Balanced Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Balanced Portfolio 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 Balanced Portfolio will offset losses from the drop in Balanced Portfolio'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 |
| Balanced Portfolio vs. Strategic Allocation Servative | Balanced Portfolio vs. Strategic Allocation Aggressive | Balanced Portfolio vs. Value Fund Investor | Balanced Portfolio vs. International Growth Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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