Correlation Between Franklin Federal and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Massmutual Premier 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 Massmutual Premier 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 Massmutual Premier Short Duration, you can compare the effects of market volatilities on Franklin Federal and Massmutual Premier 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 Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Massmutual Premier.
Diversification Opportunities for Franklin Federal and Massmutual Premier
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Massmutual is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Massmutual Premier Short Durat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Franklin Federal i.e., Franklin Federal and Massmutual Premier go up and down completely randomly.
Pair Corralation between Franklin Federal and Massmutual Premier
Assuming the 90 days horizon Franklin Federal is expected to generate 1.72 times less return on investment than Massmutual Premier. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.46 times less risky than Massmutual Premier. It trades about 0.21 of its potential returns per unit of risk. Massmutual Premier Short Duration is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Massmutual Premier Short Duration on September 14, 2024 and sell it today you would earn a total of 84.00 from holding Massmutual Premier Short Duration or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Massmutual Premier Short Durat
Performance |
| Timeline |
| Franklin Federal Lim |
| Massmutual Premier |
Franklin Federal and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Massmutual Premier
The main advantage of trading using opposite Franklin Federal and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Massmutual Premier 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 Massmutual Premier will offset losses from the drop in Massmutual Premier'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 |
| Massmutual Premier vs. Angel Oak Ultrashort | Massmutual Premier vs. Virtus Multi Sector Short | Massmutual Premier vs. Lord Abbett Short | Massmutual Premier vs. Franklin Federal Limited Term |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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