Correlation Between Franklin Federal and Maryland Short-term
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Maryland Short-term 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 Maryland Short-term 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 Maryland Short Term Tax Free, you can compare the effects of market volatilities on Franklin Federal and Maryland Short-term 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 Maryland Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Maryland Short-term.
Diversification Opportunities for Franklin Federal and Maryland Short-term
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Maryland is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Maryland Short Term Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Short Term 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 Maryland Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Short Term has no effect on the direction of Franklin Federal i.e., Franklin Federal and Maryland Short-term go up and down completely randomly.
Pair Corralation between Franklin Federal and Maryland Short-term
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate about the same return on investment as Maryland Short Term Tax Free. But, Franklin Federal Limited Term is 1.0 times less risky than Maryland Short-term. It trades about 0.15 of its potential returns per unit of risk. Maryland Short Term Tax Free is currently generating about 0.15 per unit of risk. If you would invest 512.00 in Maryland Short Term Tax Free on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Maryland Short Term Tax Free or generate 0.39% 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. Maryland Short Term Tax Free
Performance |
| Timeline |
| Franklin Federal Lim |
| Maryland Short Term |
Franklin Federal and Maryland Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Maryland Short-term
The main advantage of trading using opposite Franklin Federal and Maryland Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Maryland Short-term 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 Maryland Short-term will offset losses from the drop in Maryland Short-term'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 |
| Maryland Short-term vs. Maryland Tax Free Bond | Maryland Short-term vs. Georgia Tax Free Bond | Maryland Short-term vs. New York Tax Free | Maryland Short-term vs. New Jersey Tax Free |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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