Correlation Between California Municipal and Franklin Adjustable
Can any of the company-specific risk be diversified away by investing in both California Municipal and Franklin Adjustable 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 California Municipal and Franklin Adjustable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Municipal Portfolio and Franklin Adjustable Government, you can compare the effects of market volatilities on California Municipal and Franklin Adjustable 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 California Municipal with a short position of Franklin Adjustable. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Franklin Adjustable.
Diversification Opportunities for California Municipal and Franklin Adjustable
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Franklin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and California Municipal 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 California Municipal Portfolio are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of California Municipal i.e., California Municipal and Franklin Adjustable go up and down completely randomly.
Pair Corralation between California Municipal and Franklin Adjustable
Assuming the 90 days horizon California Municipal is expected to generate 1.54 times less return on investment than Franklin Adjustable. In addition to that, California Municipal is 1.26 times more volatile than Franklin Adjustable Government. It trades about 0.07 of its total potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.13 per unit of volatility. If you would invest 698.00 in Franklin Adjustable Government on October 27, 2024 and sell it today you would earn a total of 55.00 from holding Franklin Adjustable Government or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Municipal Portfolio vs. Franklin Adjustable Government
Performance |
| Timeline |
| California Municipal |
| Franklin Adjustable |
California Municipal and Franklin Adjustable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Municipal and Franklin Adjustable
The main advantage of trading using opposite California Municipal and Franklin Adjustable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Municipal position performs unexpectedly, Franklin Adjustable 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 Adjustable will offset losses from the drop in Franklin Adjustable's long position.| California Municipal vs. Artisan High Income | California Municipal vs. Franklin Government Money | California Municipal vs. Ab Bond Inflation | California Municipal vs. Blrc Sgy Mnp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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