Correlation Between California Municipal and Franklin
Can any of the company-specific risk be diversified away by investing in both California Municipal and Franklin 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 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 Government Money, you can compare the effects of market volatilities on California Municipal and Franklin 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Franklin.
Diversification Opportunities for California Municipal and Franklin
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between California and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of California Municipal i.e., California Municipal and Franklin go up and down completely randomly.
Pair Corralation between California Municipal and Franklin
If you would invest 1,380 in California Municipal Portfolio on October 25, 2024 and sell it today you would earn a total of 0.00 from holding California Municipal Portfolio or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Municipal Portfolio vs. Franklin Government Money
Performance |
| Timeline |
| California Municipal |
| Franklin Government Money |
California Municipal and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Municipal and Franklin
The main advantage of trading using opposite California Municipal and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Municipal position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.The idea behind California Municipal Portfolio and Franklin Government Money pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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