Correlation Between General Money and Franklin Government
Can any of the company-specific risk be diversified away by investing in both General Money and Franklin Government 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 General Money and Franklin Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Franklin Government Money, you can compare the effects of market volatilities on General Money and Franklin Government 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 General Money with a short position of Franklin Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Franklin Government.
Diversification Opportunities for General Money and Franklin Government
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between General and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and General Money 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 Money Market are associated (or correlated) with Franklin Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of General Money i.e., General Money and Franklin Government go up and down completely randomly.
Pair Corralation between General Money and Franklin Government
Assuming the 90 days horizon General Money Market is expected to generate 6.37 times more return on investment than Franklin Government. However, General Money is 6.37 times more volatile than Franklin Government Money. It trades about 0.02 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.13 per unit of risk. If you would invest 92.00 in General Money Market on September 12, 2024 and sell it today you would earn a total of 8.00 from holding General Money Market or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.21% |
| Values | Daily Returns |
General Money Market vs. Franklin Government Money
Performance |
| Timeline |
| General Money Market |
| Franklin Government Money |
General Money and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Franklin Government
The main advantage of trading using opposite General Money and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Franklin Government 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 Government will offset losses from the drop in Franklin Government's long position.| General Money vs. T Rowe Price | General Money vs. Multisector Bond Sma | General Money vs. Ambrus Core Bond | General Money vs. Blrc Sgy Mnp |
| Franklin Government vs. Buffalo High Yield | Franklin Government vs. Fidelity Capital Income | Franklin Government vs. T Rowe Price | Franklin Government vs. Prudential High Yield |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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