Correlation Between Transam Short-term and Franklin High
Can any of the company-specific risk be diversified away by investing in both Transam Short-term 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 Transam Short-term and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transam Short Term Bond and Franklin High Yield, you can compare the effects of market volatilities on Transam Short-term 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 Transam Short-term with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transam Short-term and Franklin High.
Diversification Opportunities for Transam Short-term and Franklin High
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transam and Franklin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Transam Short Term Bond 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 Transam Short-term 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 Transam Short Term Bond 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 Transam Short-term i.e., Transam Short-term and Franklin High go up and down completely randomly.
Pair Corralation between Transam Short-term and Franklin High
Assuming the 90 days horizon Transam Short Term Bond is expected to generate 0.53 times more return on investment than Franklin High. However, Transam Short Term Bond is 1.88 times less risky than Franklin High. It trades about 0.12 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.05 per unit of risk. If you would invest 892.00 in Transam Short Term Bond on October 11, 2024 and sell it today you would earn a total of 87.00 from holding Transam Short Term Bond or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transam Short Term Bond vs. Franklin High Yield
Performance |
| Timeline |
| Transam Short Term |
| Franklin High Yield |
Transam Short-term and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transam Short-term and Franklin High
The main advantage of trading using opposite Transam Short-term and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transam Short-term 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.| Transam Short-term vs. Multi Manager High Yield | Transam Short-term vs. Dunham High Yield | Transam Short-term vs. Mesirow Financial High | Transam Short-term vs. Lord Abbett Short |
| Franklin High vs. Touchstone Ultra Short | Franklin High vs. Siit Ultra Short | Franklin High vs. Transam Short Term Bond | Franklin High vs. Angel Oak Ultrashort |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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