Correlation Between Pace Municipal and Franklin Efolio
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Franklin Efolio 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 Pace Municipal and Franklin Efolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Franklin Efolio Allocation, you can compare the effects of market volatilities on Pace Municipal and Franklin Efolio 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 Pace Municipal with a short position of Franklin Efolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Franklin Efolio.
Diversification Opportunities for Pace Municipal and Franklin Efolio
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Franklin Efolio Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Efolio Allo and Pace Municipal 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 Pace Municipal Fixed are associated (or correlated) with Franklin Efolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Efolio Allo has no effect on the direction of Pace Municipal i.e., Pace Municipal and Franklin Efolio go up and down completely randomly.
Pair Corralation between Pace Municipal and Franklin Efolio
Assuming the 90 days horizon Pace Municipal is expected to generate 5.66 times less return on investment than Franklin Efolio. But when comparing it to its historical volatility, Pace Municipal Fixed is 5.52 times less risky than Franklin Efolio. It trades about 0.08 of its potential returns per unit of risk. Franklin Efolio Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,368 in Franklin Efolio Allocation on October 23, 2024 and sell it today you would earn a total of 32.00 from holding Franklin Efolio Allocation or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Franklin Efolio Allocation
Performance |
| Timeline |
| Pace Municipal Fixed |
| Franklin Efolio Allo |
Pace Municipal and Franklin Efolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Franklin Efolio
The main advantage of trading using opposite Pace Municipal and Franklin Efolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Franklin Efolio 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 Efolio will offset losses from the drop in Franklin Efolio's long position.| Pace Municipal vs. Morningstar Defensive Bond | Pace Municipal vs. Western Asset Municipal | Pace Municipal vs. Intermediate Term Bond Fund | Pace Municipal vs. Multisector Bond Sma |
| Franklin Efolio vs. Ambrus Core Bond | Franklin Efolio vs. Bbh Intermediate Municipal | Franklin Efolio vs. T Rowe Price | Franklin Efolio vs. Barings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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