Correlation Between Prudential High and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Prudential 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 Prudential 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 Prudential High Yield and Franklin Federal Limited Term, you can compare the effects of market volatilities on Prudential 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 Prudential High with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Franklin Federal.
Diversification Opportunities for Prudential High and Franklin Federal
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PRUDENTIAL and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Prudential 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 Prudential 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 Lim has no effect on the direction of Prudential High i.e., Prudential High and Franklin Federal go up and down completely randomly.
Pair Corralation between Prudential High and Franklin Federal
Assuming the 90 days horizon Prudential High Yield is expected to generate 1.57 times more return on investment than Franklin Federal. However, Prudential High is 1.57 times more volatile than Franklin Federal Limited Term. It trades about 0.14 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.09 per unit of risk. If you would invest 474.00 in Prudential High Yield on October 26, 2024 and sell it today you would earn a total of 8.00 from holding Prudential High Yield or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Prudential High Yield |
| Franklin Federal Lim |
Prudential High and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Franklin Federal
The main advantage of trading using opposite Prudential High and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential 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.| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
| Franklin Federal vs. Aqr Diversified Arbitrage | Franklin Federal vs. Vy T Rowe | Franklin Federal vs. Oklahoma College Savings | Franklin Federal vs. Wilmington Diversified Income |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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