Correlation Between Transamerica Financial and Franklin Ohio
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial and Franklin Ohio 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 Transamerica Financial and Franklin Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Franklin Ohio Tax Free, you can compare the effects of market volatilities on Transamerica Financial and Franklin Ohio 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 Transamerica Financial with a short position of Franklin Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Franklin Ohio.
Diversification Opportunities for Transamerica Financial and Franklin Ohio
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transamerica and Franklin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Franklin Ohio Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Ohio Tax and Transamerica Financial 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 Transamerica Financial Life are associated (or correlated) with Franklin Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Ohio Tax has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Franklin Ohio go up and down completely randomly.
Pair Corralation between Transamerica Financial and Franklin Ohio
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 3.5 times more return on investment than Franklin Ohio. However, Transamerica Financial is 3.5 times more volatile than Franklin Ohio Tax Free. It trades about 0.06 of its potential returns per unit of risk. Franklin Ohio Tax Free is currently generating about 0.06 per unit of risk. If you would invest 1,003 in Transamerica Financial Life on September 2, 2024 and sell it today you would earn a total of 244.00 from holding Transamerica Financial Life or generate 24.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Franklin Ohio Tax Free
Performance |
| Timeline |
| Transamerica Financial |
| Franklin Ohio Tax |
Transamerica Financial and Franklin Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Franklin Ohio
The main advantage of trading using opposite Transamerica Financial and Franklin Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial position performs unexpectedly, Franklin Ohio 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 Ohio will offset losses from the drop in Franklin Ohio's long position.| Transamerica Financial vs. Allianzgi Health Sciences | Transamerica Financial vs. Hartford Healthcare Hls | Transamerica Financial vs. Baillie Gifford Health | Transamerica Financial vs. Deutsche Health And |
| Franklin Ohio vs. Franklin Mutual Beacon | Franklin Ohio vs. Templeton Developing Markets | Franklin Ohio vs. Franklin Mutual Global | Franklin Ohio 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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