Correlation Between Franklin Federal and Rationalpier
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Rationalpier 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 Rationalpier 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 Rationalpier 88 Convertible, you can compare the effects of market volatilities on Franklin Federal and Rationalpier 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 Rationalpier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Rationalpier.
Diversification Opportunities for Franklin Federal and Rationalpier
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Rationalpier is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv 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 Rationalpier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Franklin Federal i.e., Franklin Federal and Rationalpier go up and down completely randomly.
Pair Corralation between Franklin Federal and Rationalpier
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.19 times more return on investment than Rationalpier. However, Franklin Federal Limited Term is 5.14 times less risky than Rationalpier. It trades about -0.2 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about -0.24 per unit of risk. If you would invest 1,031 in Franklin Federal Limited Term on September 23, 2024 and sell it today you would lose (5.00) from holding Franklin Federal Limited Term or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Rationalpier 88 Convertible
Performance |
| Timeline |
| Franklin Federal Lim |
| Rationalpier 88 Conv |
Franklin Federal and Rationalpier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Rationalpier
The main advantage of trading using opposite Franklin Federal and Rationalpier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Rationalpier 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 Rationalpier will offset losses from the drop in Rationalpier's long position.| Franklin Federal vs. Aam Select Income | Franklin Federal vs. Balanced Fund Investor | Franklin Federal vs. Scharf Global Opportunity | Franklin Federal vs. Western Asset Municipal |
| Rationalpier vs. Franklin Federal Limited Term | Rationalpier vs. Lord Abbett Short | Rationalpier vs. Rbc Short Duration | Rationalpier 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |