Correlation Between Government Long and Franklin High
Can any of the company-specific risk be diversified away by investing in both Government Long and Franklin High 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 Government Long and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Long Bond and Franklin High Yield, you can compare the effects of market volatilities on Government Long and Franklin High 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 Government Long with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Long and Franklin High.
Diversification Opportunities for Government Long and Franklin High
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Government and Franklin is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Government Long Bond and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and Government Long 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 Government Long Bond are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Government Long i.e., Government Long and Franklin High go up and down completely randomly.
Pair Corralation between Government Long and Franklin High
Assuming the 90 days horizon Government Long Bond is expected to under-perform the Franklin High. In addition to that, Government Long is 3.29 times more volatile than Franklin High Yield. It trades about -0.07 of its total potential returns per unit of risk. Franklin High Yield is currently generating about 0.14 per unit of volatility. If you would invest 899.00 in Franklin High Yield on August 26, 2024 and sell it today you would earn a total of 10.00 from holding Franklin High Yield or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Long Bond vs. Franklin High Yield
Performance |
| Timeline |
| Government Long Bond |
| Franklin High Yield |
Government Long and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Long and Franklin High
The main advantage of trading using opposite Government Long and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Long position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Government Long vs. Franklin High Yield | Government Long vs. Pace Municipal Fixed | Government Long vs. T Rowe Price | Government Long vs. Artisan High Income |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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