Correlation Between Fundamental Large and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Fundamental Large and Franklin Federal 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 Fundamental Large and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and Franklin Federal Tax Free, you can compare the effects of market volatilities on Fundamental Large and Franklin Federal 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 Fundamental Large with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Franklin Federal.
Diversification Opportunities for Fundamental Large and Franklin Federal
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between FUNDAMENTAL and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Fundamental Large 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 Fundamental Large Cap are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Fundamental Large i.e., Fundamental Large and Franklin Federal go up and down completely randomly.
Pair Corralation between Fundamental Large and Franklin Federal
Assuming the 90 days horizon Fundamental Large Cap is expected to generate 2.41 times more return on investment than Franklin Federal. However, Fundamental Large is 2.41 times more volatile than Franklin Federal Tax Free. It trades about 0.37 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.19 per unit of risk. If you would invest 7,810 in Fundamental Large Cap on September 4, 2024 and sell it today you would earn a total of 476.00 from holding Fundamental Large Cap or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Large Cap vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Fundamental Large Cap |
| Franklin Federal Tax |
Fundamental Large and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Large and Franklin Federal
The main advantage of trading using opposite Fundamental Large and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Multimanager Lifestyle Moderate | Fundamental Large vs. Multimanager Lifestyle Balanced |
| Franklin Federal vs. Tax Managed Large Cap | Franklin Federal vs. Fundamental Large Cap | Franklin Federal vs. Fidelity Series 1000 | Franklin Federal vs. Vela Large Cap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |