Correlation Between Precious Metals and Franklin California
Can any of the company-specific risk be diversified away by investing in both Precious Metals and Franklin California 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 Precious Metals and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals Fund and Franklin California Tax Free, you can compare the effects of market volatilities on Precious Metals and Franklin California 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 Precious Metals with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Franklin California.
Diversification Opportunities for Precious Metals and Franklin California
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Precious and FRANKLIN is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals Fund and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Precious Metals 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 Precious Metals Fund are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Precious Metals i.e., Precious Metals and Franklin California go up and down completely randomly.
Pair Corralation between Precious Metals and Franklin California
Assuming the 90 days horizon Precious Metals Fund is expected to generate 6.73 times more return on investment than Franklin California. However, Precious Metals is 6.73 times more volatile than Franklin California Tax Free. It trades about 0.35 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.18 per unit of risk. If you would invest 3,983 in Precious Metals Fund on November 9, 2024 and sell it today you would earn a total of 464.00 from holding Precious Metals Fund or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals Fund vs. Franklin California Tax Free
Performance |
| Timeline |
| Precious Metals |
| Franklin California Tax |
Precious Metals and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Franklin California
The main advantage of trading using opposite Precious Metals and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Precious Metals vs. Energy Fund Investor | Precious Metals vs. Energy Services Fund | Precious Metals vs. Basic Materials Fund | Precious Metals vs. Health Care Fund |
| Franklin California vs. Barings Active Short | Franklin California vs. Angel Oak Ultrashort | Franklin California vs. Nuveen Short Term | Franklin California vs. Aqr Long Short Equity |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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