Correlation Between Federated Ultrashort and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Federated Ultrashort and Franklin Federal 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 Federated Ultrashort and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ultrashort Bond and Franklin Federal Limited Term, you can compare the effects of market volatilities on Federated Ultrashort and Franklin Federal 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 Federated Ultrashort with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Franklin Federal.
Diversification Opportunities for Federated Ultrashort and Franklin Federal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Federated Ultrashort 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 Federated Ultrashort Bond are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Franklin Federal go up and down completely randomly.
Pair Corralation between Federated Ultrashort and Franklin Federal
Assuming the 90 days horizon Federated Ultrashort Bond is expected to generate 0.95 times more return on investment than Franklin Federal. However, Federated Ultrashort Bond is 1.05 times less risky than Franklin Federal. It trades about 0.24 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.16 per unit of risk. If you would invest 849.00 in Federated Ultrashort Bond on August 31, 2024 and sell it today you would earn a total of 78.00 from holding Federated Ultrashort Bond or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ultrashort Bond vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Federated Ultrashort Bond |
| Franklin Federal Lim |
Federated Ultrashort and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ultrashort and Franklin Federal
The main advantage of trading using opposite Federated Ultrashort and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ultrashort position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Federated Ultrashort vs. Virtus Global Real | Federated Ultrashort vs. Allianzgi Mid Cap Fund | Federated Ultrashort vs. Virtus Select Mlp | Federated Ultrashort vs. Aquagold International |
| Franklin Federal vs. Pro Blend Moderate Term | Franklin Federal vs. Wisdomtree Siegel Moderate | Franklin Federal vs. Blackrock Moderate Prepared | Franklin Federal vs. Lifestyle Ii Moderate |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |