Correlation Between Davis Financial and Franklin Ohio
Can any of the company-specific risk be diversified away by investing in both Davis Financial and Franklin Ohio 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 Davis Financial and Franklin Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Franklin Ohio Tax Free, you can compare the effects of market volatilities on Davis Financial and Franklin Ohio 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 Davis Financial with a short position of Franklin Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Franklin Ohio.
Diversification Opportunities for Davis Financial and Franklin Ohio
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAVIS and Franklin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Franklin Ohio Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Ohio Tax and Davis Financial 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 Davis Financial Fund are associated (or correlated) with Franklin Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Ohio Tax has no effect on the direction of Davis Financial i.e., Davis Financial and Franklin Ohio go up and down completely randomly.
Pair Corralation between Davis Financial and Franklin Ohio
Assuming the 90 days horizon Davis Financial Fund is expected to generate 4.15 times more return on investment than Franklin Ohio. However, Davis Financial is 4.15 times more volatile than Franklin Ohio Tax Free. It trades about 0.12 of its potential returns per unit of risk. Franklin Ohio Tax Free is currently generating about 0.07 per unit of risk. If you would invest 4,684 in Davis Financial Fund on August 31, 2024 and sell it today you would earn a total of 2,395 from holding Davis Financial Fund or generate 51.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Davis Financial Fund vs. Franklin Ohio Tax Free
Performance |
| Timeline |
| Davis Financial |
| Franklin Ohio Tax |
Davis Financial and Franklin Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Franklin Ohio
The main advantage of trading using opposite Davis Financial and Franklin Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Franklin Ohio 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 Ohio will offset losses from the drop in Franklin Ohio's long position.| Davis Financial vs. Nationwide Growth Fund | Davis Financial vs. T Rowe Price | Davis Financial vs. Rational Defensive Growth | Davis Financial vs. Artisan Small Cap |
| Franklin Ohio vs. Vanguard Financials Index | Franklin Ohio vs. Transamerica Financial Life | Franklin Ohio vs. Davis Financial Fund | Franklin Ohio vs. John Hancock Financial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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