Correlation Between Pace Municipal and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Franklin Mutual 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 Mutual 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 Mutual European, you can compare the effects of market volatilities on Pace Municipal and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Franklin Mutual.
Diversification Opportunities for Pace Municipal and Franklin Mutual
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual European has no effect on the direction of Pace Municipal i.e., Pace Municipal and Franklin Mutual go up and down completely randomly.
Pair Corralation between Pace Municipal and Franklin Mutual
Assuming the 90 days horizon Pace Municipal is expected to generate 3.2 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Pace Municipal Fixed is 4.58 times less risky than Franklin Mutual. It trades about 0.08 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,040 in Franklin Mutual European on September 14, 2024 and sell it today you would earn a total of 484.00 from holding Franklin Mutual European or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Franklin Mutual European
Performance |
| Timeline |
| Pace Municipal Fixed |
| Franklin Mutual European |
Pace Municipal and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Franklin Mutual
The main advantage of trading using opposite Pace Municipal and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Pace Municipal vs. Ishares Municipal Bond | Pace Municipal vs. Dws Government Money | Pace Municipal vs. Oklahoma Municipal Fund | Pace Municipal vs. Old Westbury Municipal |
| Franklin Mutual vs. Pace Municipal Fixed | Franklin Mutual vs. T Rowe Price | Franklin Mutual vs. Nuveen Minnesota Municipal | Franklin Mutual vs. Alliancebernstein National Municipal |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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