Correlation Between Franklin Federal and Ultra Short
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Ultra Short 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 Ultra Short 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 Ultra Short Term Fixed, you can compare the effects of market volatilities on Franklin Federal and Ultra Short 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 Ultra Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Ultra Short.
Diversification Opportunities for Franklin Federal and Ultra Short
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Ultra is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Ultra Short Term Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra 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 Ultra Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Term has no effect on the direction of Franklin Federal i.e., Franklin Federal and Ultra Short go up and down completely randomly.
Pair Corralation between Franklin Federal and Ultra Short
Assuming the 90 days horizon Franklin Federal is expected to generate 1.08 times less return on investment than Ultra Short. In addition to that, Franklin Federal is 1.98 times more volatile than Ultra Short Term Fixed. It trades about 0.21 of its total potential returns per unit of risk. Ultra Short Term Fixed is currently generating about 0.44 per unit of volatility. If you would invest 920.00 in Ultra Short Term Fixed on September 14, 2024 and sell it today you would earn a total of 57.00 from holding Ultra Short Term Fixed or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Ultra Short Term Fixed
Performance |
| Timeline |
| Franklin Federal Lim |
| Ultra Short Term |
Franklin Federal and Ultra Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Ultra Short
The main advantage of trading using opposite Franklin Federal and Ultra Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Ultra Short 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 Ultra Short will offset losses from the drop in Ultra Short'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 |
| Ultra Short vs. Touchstone Ultra Short | Ultra Short vs. Franklin Federal Limited Term | Ultra Short vs. Dreyfus Short Intermediate | Ultra Short vs. Boston Partners Longshort |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |