Correlation Between Franklin Federal and Towpath Technology
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Towpath Technology 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 Towpath Technology 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 Towpath Technology, you can compare the effects of market volatilities on Franklin Federal and Towpath Technology 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 Towpath Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Towpath Technology.
Diversification Opportunities for Franklin Federal and Towpath Technology
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Towpath is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Towpath Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towpath Technology 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 Towpath Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towpath Technology has no effect on the direction of Franklin Federal i.e., Franklin Federal and Towpath Technology go up and down completely randomly.
Pair Corralation between Franklin Federal and Towpath Technology
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.04 times more return on investment than Towpath Technology. However, Franklin Federal Limited Term is 24.7 times less risky than Towpath Technology. It trades about 0.37 of its potential returns per unit of risk. Towpath Technology is currently generating about 0.0 per unit of risk. If you would invest 1,030 in Franklin Federal Limited Term on September 14, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Federal Limited Term or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Towpath Technology
Performance |
| Timeline |
| Franklin Federal Lim |
| Towpath Technology |
Franklin Federal and Towpath Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Towpath Technology
The main advantage of trading using opposite Franklin Federal and Towpath Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Towpath Technology 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 Towpath Technology will offset losses from the drop in Towpath Technology'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 |
| Towpath Technology vs. Aqr Long Short Equity | Towpath Technology vs. Virtus Multi Sector Short | Towpath Technology vs. Franklin Federal Limited Term | Towpath Technology vs. Siit 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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