Correlation Between Transamerica Intermediate and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate and Franklin Equity 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 Transamerica Intermediate and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Intermediate Muni and Franklin Equity Income, you can compare the effects of market volatilities on Transamerica Intermediate and Franklin Equity 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 Transamerica Intermediate with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Franklin Equity.
Diversification Opportunities for Transamerica Intermediate and Franklin Equity
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Franklin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Transamerica Intermediate 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 Transamerica Intermediate Muni are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Franklin Equity go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Franklin Equity
Assuming the 90 days horizon Transamerica Intermediate is expected to generate 855.5 times less return on investment than Franklin Equity. But when comparing it to its historical volatility, Transamerica Intermediate Muni is 2.94 times less risky than Franklin Equity. It trades about 0.0 of its potential returns per unit of risk. Franklin Equity Income is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,142 in Franklin Equity Income on October 22, 2024 and sell it today you would earn a total of 97.00 from holding Franklin Equity Income or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Franklin Equity Income
Performance |
| Timeline |
| Transamerica Intermediate |
| Franklin Equity Income |
Transamerica Intermediate and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Franklin Equity
The main advantage of trading using opposite Transamerica Intermediate and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Transamerica Intermediate vs. Needham Small Cap | Transamerica Intermediate vs. Lebenthal Lisanti Small | Transamerica Intermediate vs. Ab Small Cap | Transamerica Intermediate vs. Champlain Small |
| Franklin Equity vs. International Growth Fund | Franklin Equity vs. Growth Fund Investor | Franklin Equity vs. Ultra Fund Investor | Franklin Equity vs. Strategic Allocation Aggressive |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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