Correlation Between GM and Franklin Minnesota
Can any of the company-specific risk be diversified away by investing in both GM and Franklin Minnesota 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 GM and Franklin Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Franklin Minnesota Tax Free, you can compare the effects of market volatilities on GM and Franklin Minnesota 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 GM with a short position of Franklin Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Franklin Minnesota.
Diversification Opportunities for GM and Franklin Minnesota
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Franklin is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Franklin Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Minnesota Tax and GM 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 General Motors are associated (or correlated) with Franklin Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Minnesota Tax has no effect on the direction of GM i.e., GM and Franklin Minnesota go up and down completely randomly.
Pair Corralation between GM and Franklin Minnesota
Allowing for the 90-day total investment horizon General Motors is expected to generate 7.63 times more return on investment than Franklin Minnesota. However, GM is 7.63 times more volatile than Franklin Minnesota Tax Free. It trades about 0.04 of its potential returns per unit of risk. Franklin Minnesota Tax Free is currently generating about 0.06 per unit of risk. If you would invest 3,765 in General Motors on September 4, 2024 and sell it today you would earn a total of 1,601 from holding General Motors or generate 42.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Franklin Minnesota Tax Free
Performance |
| Timeline |
| General Motors |
| Franklin Minnesota Tax |
GM and Franklin Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Franklin Minnesota
The main advantage of trading using opposite GM and Franklin Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Franklin Minnesota 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 Minnesota will offset losses from the drop in Franklin Minnesota's long position.The idea behind General Motors and Franklin Minnesota Tax Free pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin Minnesota vs. Franklin Mutual Beacon | Franklin Minnesota vs. Templeton Developing Markets | Franklin Minnesota vs. Franklin Mutual Global | Franklin Minnesota vs. Franklin Mutual Global |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |