Correlation Between Franklin Federal and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Blue Chip 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 Blue Chip 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 Blue Chip Fund, you can compare the effects of market volatilities on Franklin Federal and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Blue Chip.
Diversification Opportunities for Franklin Federal and Blue Chip
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Blue is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Franklin Federal i.e., Franklin Federal and Blue Chip go up and down completely randomly.
Pair Corralation between Franklin Federal and Blue Chip
Assuming the 90 days horizon Franklin Federal is expected to generate 17.53 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.43 times less risky than Blue Chip. It trades about 0.15 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,515 in Blue Chip Fund on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Blue Chip Fund or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Blue Chip Fund
Performance |
| Timeline |
| Franklin Federal Lim |
| Blue Chip Fund |
Franklin Federal and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Blue Chip
The main advantage of trading using opposite Franklin Federal and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip's long position.| Franklin Federal vs. Small Midcap Dividend Income | Franklin Federal vs. Tax Managed Mid Small | Franklin Federal vs. Touchstone Small Cap | Franklin Federal vs. Jpmorgan Small Cap |
| Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| 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 | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |