Correlation Between Swan Defined and Franklin High
Can any of the company-specific risk be diversified away by investing in both Swan Defined 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 Swan Defined and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Defined Risk and Franklin High Yield, you can compare the effects of market volatilities on Swan Defined 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 Swan Defined with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Franklin High.
Diversification Opportunities for Swan Defined and Franklin High
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swan and Franklin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk 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 Swan Defined 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 Swan Defined Risk 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 Swan Defined i.e., Swan Defined and Franklin High go up and down completely randomly.
Pair Corralation between Swan Defined and Franklin High
Assuming the 90 days horizon Swan Defined Risk is expected to generate 3.34 times more return on investment than Franklin High. However, Swan Defined is 3.34 times more volatile than Franklin High Yield. It trades about 0.05 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.1 per unit of risk. If you would invest 1,343 in Swan Defined Risk on September 12, 2024 and sell it today you would earn a total of 241.00 from holding Swan Defined Risk or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Defined Risk vs. Franklin High Yield
Performance |
| Timeline |
| Swan Defined Risk |
| Franklin High Yield |
Swan Defined and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Defined and Franklin High
The main advantage of trading using opposite Swan Defined and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined 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.| Swan Defined vs. California High Yield Municipal | Swan Defined vs. Oklahoma Municipal Fund | Swan Defined vs. Franklin High Yield | Swan Defined vs. Ishares Municipal Bond |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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