Correlation Between Easterly Snow and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Easterly Snow and Franklin Federal 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 Easterly Snow and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easterly Snow Longshort and Franklin Federal Limited Term, you can compare the effects of market volatilities on Easterly Snow and Franklin Federal 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 Easterly Snow with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easterly Snow and Franklin Federal.
Diversification Opportunities for Easterly Snow and Franklin Federal
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Easterly and Franklin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Easterly Snow Longshort and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Easterly Snow 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 Easterly Snow Longshort are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Easterly Snow i.e., Easterly Snow and Franklin Federal go up and down completely randomly.
Pair Corralation between Easterly Snow and Franklin Federal
Assuming the 90 days horizon Easterly Snow Longshort is expected to generate 8.86 times more return on investment than Franklin Federal. However, Easterly Snow is 8.86 times more volatile than Franklin Federal Limited Term. It trades about 0.03 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.19 per unit of risk. If you would invest 3,298 in Easterly Snow Longshort on September 12, 2024 and sell it today you would earn a total of 94.00 from holding Easterly Snow Longshort or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Easterly Snow Longshort vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Easterly Snow Longshort |
| Franklin Federal Lim |
Easterly Snow and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easterly Snow and Franklin Federal
The main advantage of trading using opposite Easterly Snow and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easterly Snow position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Easterly Snow vs. SCOR PK | Easterly Snow vs. Morningstar Unconstrained Allocation | Easterly Snow vs. Thrivent High Yield | Easterly Snow vs. Via Renewables |
| Franklin Federal vs. Vanguard Limited Term Tax Exempt | Franklin Federal vs. SCOR PK | Franklin Federal vs. Morningstar Unconstrained Allocation | Franklin Federal vs. Via Renewables |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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