Correlation Between Intermediate-term and Franklin High
Can any of the company-specific risk be diversified away by investing in both Intermediate-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 Intermediate-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 Intermediate Term Tax Free Bond and Franklin High Yield, you can compare the effects of market volatilities on Intermediate-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 Intermediate-term with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Franklin High.
Diversification Opportunities for Intermediate-term and Franklin High
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Intermediate-term and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Tax Free Bon 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 Intermediate-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 Intermediate Term 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 Intermediate-term i.e., Intermediate-term and Franklin High go up and down completely randomly.
Pair Corralation between Intermediate-term and Franklin High
Assuming the 90 days horizon Intermediate Term Tax Free Bond is expected to under-perform the Franklin High. But the mutual fund apears to be less risky and, when comparing its historical volatility, Intermediate Term Tax Free Bond is 1.42 times less risky than Franklin High. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Franklin High Yield is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 908.00 in Franklin High Yield on October 26, 2024 and sell it today you would earn a total of 1.00 from holding Franklin High Yield or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Tax Free Bon vs. Franklin High Yield
Performance |
| Timeline |
| Intermediate Term Tax |
| Franklin High Yield |
Intermediate-term and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate-term and Franklin High
The main advantage of trading using opposite Intermediate-term and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate-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.| Intermediate-term vs. Prudential High Yield | Intermediate-term vs. Siit High Yield | Intermediate-term vs. Fidelity Focused High | Intermediate-term vs. Metropolitan West High |
| Franklin High vs. Growth Strategy Fund | Franklin High vs. Ashmore Emerging Markets | Franklin High vs. Commodities Strategy Fund | Franklin High vs. Western Assets Emerging |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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