Correlation Between Franklin Federal and Intermediate Taxamt-free
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Intermediate Taxamt-free 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 Intermediate Taxamt-free 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 Intermediate Taxamt Free Fund, you can compare the effects of market volatilities on Franklin Federal and Intermediate Taxamt-free 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 Intermediate Taxamt-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Intermediate Taxamt-free.
Diversification Opportunities for Franklin Federal and Intermediate Taxamt-free
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Intermediate is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Intermediate Taxamt Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Taxamt-free 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 Intermediate Taxamt-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Taxamt-free has no effect on the direction of Franklin Federal i.e., Franklin Federal and Intermediate Taxamt-free go up and down completely randomly.
Pair Corralation between Franklin Federal and Intermediate Taxamt-free
Assuming the 90 days horizon Franklin Federal is expected to generate 2.47 times less return on investment than Intermediate Taxamt-free. But when comparing it to its historical volatility, Franklin Federal Limited Term is 1.82 times less risky than Intermediate Taxamt-free. It trades about 0.15 of its potential returns per unit of risk. Intermediate Taxamt Free Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,089 in Intermediate Taxamt Free Fund on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Intermediate Taxamt Free Fund or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Intermediate Taxamt Free Fund
Performance |
| Timeline |
| Franklin Federal Lim |
| Intermediate Taxamt-free |
Franklin Federal and Intermediate Taxamt-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Intermediate Taxamt-free
The main advantage of trading using opposite Franklin Federal and Intermediate Taxamt-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Intermediate Taxamt-free 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 Intermediate Taxamt-free will offset losses from the drop in Intermediate Taxamt-free'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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