Correlation Between Hartford Municipal and Franklin High
Can any of the company-specific risk be diversified away by investing in both Hartford Municipal and Franklin High 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 Hartford Municipal and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Municipal and Franklin High Yield, you can compare the effects of market volatilities on Hartford Municipal and Franklin High 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 Hartford Municipal with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and Franklin High.
Diversification Opportunities for Hartford Municipal and Franklin High
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hartford and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Municipal and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Hartford Municipal 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 The Hartford Municipal are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and Franklin High go up and down completely randomly.
Pair Corralation between Hartford Municipal and Franklin High
Assuming the 90 days horizon Hartford Municipal is expected to generate 1.57 times less return on investment than Franklin High. But when comparing it to its historical volatility, The Hartford Municipal is 1.48 times less risky than Franklin High. It trades about 0.18 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 904.00 in Franklin High Yield on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Franklin High Yield or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Hartford Municipal vs. Franklin High Yield
Performance |
| Timeline |
| The Hartford Municipal |
| Franklin High Yield |
Hartford Municipal and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Municipal and Franklin High
The main advantage of trading using opposite Hartford Municipal and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Municipal position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Hartford Municipal vs. Great West Real Estate | Hartford Municipal vs. Deutsche Real Estate | Hartford Municipal vs. Msif Real Estate | Hartford Municipal vs. Simt Real Estate |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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