Correlation Between Gmo High and Franklin Maryland
Can any of the company-specific risk be diversified away by investing in both Gmo High and Franklin Maryland 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 Gmo High and Franklin Maryland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Franklin Maryland Tax Free, you can compare the effects of market volatilities on Gmo High and Franklin Maryland 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 Gmo High with a short position of Franklin Maryland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Franklin Maryland.
Diversification Opportunities for Gmo High and Franklin Maryland
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Franklin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Franklin Maryland Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Maryland Tax and Gmo High 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 Gmo High Yield are associated (or correlated) with Franklin Maryland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Maryland Tax has no effect on the direction of Gmo High i.e., Gmo High and Franklin Maryland go up and down completely randomly.
Pair Corralation between Gmo High and Franklin Maryland
Assuming the 90 days horizon Gmo High Yield is expected to generate 1.12 times more return on investment than Franklin Maryland. However, Gmo High is 1.12 times more volatile than Franklin Maryland Tax Free. It trades about 0.12 of its potential returns per unit of risk. Franklin Maryland Tax Free is currently generating about 0.04 per unit of risk. If you would invest 1,406 in Gmo High Yield on November 4, 2024 and sell it today you would earn a total of 285.00 from holding Gmo High Yield or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Franklin Maryland Tax Free
Performance |
| Timeline |
| Gmo High Yield |
| Franklin Maryland Tax |
Gmo High and Franklin Maryland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Franklin Maryland
The main advantage of trading using opposite Gmo High and Franklin Maryland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Franklin Maryland 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 Maryland will offset losses from the drop in Franklin Maryland's long position.| Gmo High vs. Fidelity Sai Convertible | Gmo High vs. Advent Claymore Convertible | Gmo High vs. Allianzgi Convertible Income | Gmo High vs. Lord Abbett Convertible |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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