Correlation Between Nuveen High and Franklin High
Can any of the company-specific risk be diversified away by investing in both Nuveen High 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 Nuveen High and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen High Yield and Franklin High Yield, you can compare the effects of market volatilities on Nuveen High 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 Nuveen High with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and Franklin High.
Diversification Opportunities for Nuveen High and Franklin High
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nuveen and Franklin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Yield 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 Nuveen High 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 Nuveen High Yield 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 Nuveen High i.e., Nuveen High and Franklin High go up and down completely randomly.
Pair Corralation between Nuveen High and Franklin High
Assuming the 90 days horizon Nuveen High Yield is expected to generate 1.3 times more return on investment than Franklin High. However, Nuveen High is 1.3 times more volatile than Franklin High Yield. It trades about 0.2 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.19 per unit of risk. If you would invest 1,465 in Nuveen High Yield on August 24, 2024 and sell it today you would earn a total of 32.00 from holding Nuveen High Yield or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen High Yield vs. Franklin High Yield
Performance |
| Timeline |
| Nuveen High Yield |
| Franklin High Yield |
Nuveen High and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and Franklin High
The main advantage of trading using opposite Nuveen High and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High 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.| Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Invesco High Yield | Nuveen High vs. Nuveen High Yield | Nuveen High vs. HUMANA INC |
| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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