Correlation Between Georgia Tax-free and Franklin High
Can any of the company-specific risk be diversified away by investing in both Georgia Tax-free 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 Georgia Tax-free and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Tax Free Bond and Franklin High Yield, you can compare the effects of market volatilities on Georgia Tax-free 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 Georgia Tax-free with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Franklin High.
Diversification Opportunities for Georgia Tax-free and Franklin High
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Georgia and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free 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 Georgia Tax-free 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 Georgia Tax Free 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 Georgia Tax-free i.e., Georgia Tax-free and Franklin High go up and down completely randomly.
Pair Corralation between Georgia Tax-free and Franklin High
Assuming the 90 days horizon Georgia Tax-free is expected to generate 1.68 times less return on investment than Franklin High. But when comparing it to its historical volatility, Georgia Tax Free Bond is 1.04 times less risky than Franklin High. It trades about 0.06 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 870.00 in Franklin High Yield on October 12, 2024 and sell it today you would earn a total of 38.00 from holding Franklin High Yield or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Tax Free Bond vs. Franklin High Yield
Performance |
| Timeline |
| Georgia Tax Free |
| Franklin High Yield |
Georgia Tax-free and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Tax-free and Franklin High
The main advantage of trading using opposite Georgia Tax-free and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Tax-free 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.| Georgia Tax-free vs. Columbia Moderate Growth | Georgia Tax-free vs. Tiaa Cref Lifestyle Moderate | Georgia Tax-free vs. Qs Moderate Growth | Georgia Tax-free vs. Qs Moderate Growth |
| Franklin High vs. Millerhoward High Income | Franklin High vs. Virtus High Yield | Franklin High vs. Multi Manager High Yield | Franklin High vs. Inverse High Yield |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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