Correlation Between Franklin Federal and Locorr Longshort
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Locorr Longshort 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 Locorr Longshort 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 Locorr Longshort Modities, you can compare the effects of market volatilities on Franklin Federal and Locorr Longshort 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 Locorr Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Locorr Longshort.
Diversification Opportunities for Franklin Federal and Locorr Longshort
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Locorr is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Locorr Longshort Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Longshort Modities 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 Locorr Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Longshort Modities has no effect on the direction of Franklin Federal i.e., Franklin Federal and Locorr Longshort go up and down completely randomly.
Pair Corralation between Franklin Federal and Locorr Longshort
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.45 times more return on investment than Locorr Longshort. However, Franklin Federal Limited Term is 2.25 times less risky than Locorr Longshort. It trades about 0.2 of its potential returns per unit of risk. Locorr Longshort Modities is currently generating about -0.13 per unit of risk. If you would invest 1,025 in Franklin Federal Limited Term on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Federal Limited Term or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Locorr Longshort Modities
Performance |
| Timeline |
| Franklin Federal Lim |
| Locorr Longshort Modities |
Franklin Federal and Locorr Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Locorr Longshort
The main advantage of trading using opposite Franklin Federal and Locorr Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Locorr Longshort 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 Locorr Longshort will offset losses from the drop in Locorr Longshort's long position.| Franklin Federal vs. Vanguard Intermediate Term Tax Exempt | Franklin Federal vs. Vanguard Long Term Tax Exempt | Franklin Federal vs. Vanguard High Yield Tax Exempt |
| Locorr Longshort vs. Ab Bond Inflation | Locorr Longshort vs. T Rowe Price | Locorr Longshort vs. T Rowe Price | Locorr Longshort vs. Ambrus Core Bond |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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