Correlation Between Mainstay California and Franklin California
Can any of the company-specific risk be diversified away by investing in both Mainstay California and Franklin California 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 Mainstay California and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay California Tax and Franklin California Tax Free, you can compare the effects of market volatilities on Mainstay California and Franklin California 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 Mainstay California with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay California and Franklin California.
Diversification Opportunities for Mainstay California and Franklin California
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mainstay and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay California Tax and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Mainstay California 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 Mainstay California Tax are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Mainstay California i.e., Mainstay California and Franklin California go up and down completely randomly.
Pair Corralation between Mainstay California and Franklin California
Assuming the 90 days horizon Mainstay California Tax is expected to generate 0.93 times more return on investment than Franklin California. However, Mainstay California Tax is 1.08 times less risky than Franklin California. It trades about 0.2 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.18 per unit of risk. If you would invest 976.00 in Mainstay California Tax on September 4, 2024 and sell it today you would earn a total of 12.00 from holding Mainstay California Tax or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay California Tax vs. Franklin California Tax Free
Performance |
| Timeline |
| Mainstay California Tax |
| Franklin California Tax |
Mainstay California and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay California and Franklin California
The main advantage of trading using opposite Mainstay California and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay California position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Mainstay California vs. Mainstay Tax Free | Mainstay California vs. Mainstay Large Cap | Mainstay California vs. Mainstay Large Cap | Mainstay California vs. Mainstay Large Cap |
| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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