Correlation Between American Funds and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2025 and Franklin Federal Limited Term, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Franklin Federal.
Diversification Opportunities for American Funds and Franklin Federal
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Franklin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2025 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 American Funds 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 American Funds 2025 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 American Funds i.e., American Funds and Franklin Federal go up and down completely randomly.
Pair Corralation between American Funds and Franklin Federal
Assuming the 90 days horizon American Funds 2025 is expected to generate 4.28 times more return on investment than Franklin Federal. However, American Funds is 4.28 times more volatile than Franklin Federal Limited Term. It trades about 0.12 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.17 per unit of risk. If you would invest 1,335 in American Funds 2025 on September 2, 2024 and sell it today you would earn a total of 303.00 from holding American Funds 2025 or generate 22.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2025 vs. Franklin Federal Limited Term
Performance |
| Timeline |
| American Funds 2025 |
| Franklin Federal Lim |
American Funds and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Franklin Federal
The main advantage of trading using opposite American Funds and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Ms Global Fixed | American Funds vs. T Rowe Price | American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ft 7934 Corporate |
| Franklin Federal vs. Eip Growth And | Franklin Federal vs. Kinetics Small Cap | Franklin Federal vs. Chase Growth Fund | Franklin Federal vs. T Rowe Price |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |