Correlation Between Maryland Short-term and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Maryland Short-term and Franklin Utilities 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 Maryland Short-term and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maryland Short Term Tax Free and Franklin Utilities, you can compare the effects of market volatilities on Maryland Short-term and Franklin Utilities 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 Maryland Short-term with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Short-term and Franklin Utilities.
Diversification Opportunities for Maryland Short-term and Franklin Utilities
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Maryland and Franklin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Short Term Tax Free and Franklin Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Maryland Short-term 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 Maryland Short Term Tax Free are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Maryland Short-term i.e., Maryland Short-term and Franklin Utilities go up and down completely randomly.
Pair Corralation between Maryland Short-term and Franklin Utilities
Assuming the 90 days horizon Maryland Short-term is expected to generate 7.24 times less return on investment than Franklin Utilities. But when comparing it to its historical volatility, Maryland Short Term Tax Free is 8.97 times less risky than Franklin Utilities. It trades about 0.21 of its potential returns per unit of risk. Franklin Utilities is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,161 in Franklin Utilities on September 1, 2024 and sell it today you would earn a total of 433.00 from holding Franklin Utilities or generate 20.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Maryland Short Term Tax Free vs. Franklin Utilities
Performance |
| Timeline |
| Maryland Short Term |
| Franklin Utilities |
Maryland Short-term and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Short-term and Franklin Utilities
The main advantage of trading using opposite Maryland Short-term and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Short-term position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Maryland Short-term vs. Maryland Tax Free Bond | Maryland Short-term vs. Georgia Tax Free Bond | Maryland Short-term vs. New York Tax Free | Maryland Short-term vs. New Jersey Tax Free |
| Franklin Utilities vs. Federated Ohio Municipal | Franklin Utilities vs. The National Tax Free | Franklin Utilities vs. Nuveen Minnesota Municipal | Franklin Utilities vs. Morningstar Municipal Bond |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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