Correlation Between Pgim High and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Pgim High 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 Pgim High and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pgim High Yield and Franklin Federal Tax Free, you can compare the effects of market volatilities on Pgim High 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 Pgim High with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim High and Franklin Federal.
Diversification Opportunities for Pgim High and Franklin Federal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pgim and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pgim High Yield 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 Pgim 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 Pgim High Yield 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 Pgim High i.e., Pgim High and Franklin Federal go up and down completely randomly.
Pair Corralation between Pgim High and Franklin Federal
Assuming the 90 days horizon Pgim High is expected to generate 5.28 times less return on investment than Franklin Federal. But when comparing it to its historical volatility, Pgim High Yield is 2.12 times less risky than Franklin Federal. It trades about 0.07 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Franklin Federal Tax Free on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Federal Tax Free or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pgim High Yield vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Pgim High Yield |
| Franklin Federal Tax |
Pgim High and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pgim High and Franklin Federal
The main advantage of trading using opposite Pgim High and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim High 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.| Pgim High vs. Vanguard High Yield Corporate | Pgim High vs. Vanguard High Yield Porate | Pgim High vs. Blackrock Hi Yld | Pgim High vs. Blackrock High Yield |
| Franklin Federal vs. Siit High Yield | Franklin Federal vs. Pgim High Yield | Franklin Federal vs. Blackrock High Yield | Franklin Federal vs. Gmo 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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