Correlation Between Invesco Income and Franklin High
Can any of the company-specific risk be diversified away by investing in both Invesco Income 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 Invesco Income and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Income Allocation and Franklin High Yield, you can compare the effects of market volatilities on Invesco Income 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 Invesco Income with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Income and Franklin High.
Diversification Opportunities for Invesco Income and Franklin High
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Franklin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Income Allocation 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 Invesco Income 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 Invesco Income Allocation 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 Invesco Income i.e., Invesco Income and Franklin High go up and down completely randomly.
Pair Corralation between Invesco Income and Franklin High
Assuming the 90 days horizon Invesco Income Allocation is expected to generate 1.34 times more return on investment than Franklin High. However, Invesco Income is 1.34 times more volatile than Franklin High Yield. It trades about 0.15 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.11 per unit of risk. If you would invest 1,021 in Invesco Income Allocation on September 13, 2024 and sell it today you would earn a total of 62.00 from holding Invesco Income Allocation or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Income Allocation vs. Franklin High Yield
Performance |
| Timeline |
| Invesco Income Allocation |
| Franklin High Yield |
Invesco Income and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Income and Franklin High
The main advantage of trading using opposite Invesco Income and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Income 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.| Invesco Income vs. Delaware Investments Ultrashort | Invesco Income vs. Franklin Federal Limited Term | Invesco Income vs. Kentucky Tax Free Short To Medium | Invesco Income vs. Easterly Snow Longshort |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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