Correlation Between Franklin Federal and Virtus Bond
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Virtus Bond 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 Virtus Bond 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 Virtus Bond Fund, you can compare the effects of market volatilities on Franklin Federal and Virtus Bond 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 Virtus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Virtus Bond.
Diversification Opportunities for Franklin Federal and Virtus Bond
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Virtus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond 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 Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Franklin Federal i.e., Franklin Federal and Virtus Bond go up and down completely randomly.
Pair Corralation between Franklin Federal and Virtus Bond
Assuming the 90 days horizon Franklin Federal is expected to generate 2.65 times less return on investment than Virtus Bond. But when comparing it to its historical volatility, Franklin Federal Limited Term is 2.41 times less risky than Virtus Bond. It trades about 0.17 of its potential returns per unit of risk. Virtus Bond Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 971.00 in Virtus Bond Fund on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Virtus Bond Fund or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Virtus Bond Fund
Performance |
| Timeline |
| Franklin Federal Lim |
| Virtus Bond Fund |
Franklin Federal and Virtus Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Virtus Bond
The main advantage of trading using opposite Franklin Federal and Virtus Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Virtus Bond 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 Virtus Bond will offset losses from the drop in Virtus Bond's long position.| Franklin Federal vs. Shelton Emerging Markets | Franklin Federal vs. Siit Emerging Markets | Franklin Federal vs. Hartford Schroders Emerging | Franklin Federal vs. Angel Oak Multi Strategy |
| Virtus Bond vs. Gold And Precious | Virtus Bond vs. Investment Managers Series | Virtus Bond vs. Wells Fargo Advantage | Virtus Bond vs. Franklin Gold Precious |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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