Correlation Between Us Government and Franklin High
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Franklin High Yield, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Franklin High.
Diversification Opportunities for Us Government and Franklin High
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UGSDX and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Franklin High go up and down completely randomly.
Pair Corralation between Us Government and Franklin High
Assuming the 90 days horizon Us Government is expected to generate 2.35 times less return on investment than Franklin High. But when comparing it to its historical volatility, Us Government Securities is 2.03 times less risky than Franklin High. It trades about 0.11 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 808.00 in Franklin High Yield on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Franklin High Yield or generate 13.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Franklin High Yield
Performance |
| Timeline |
| Us Government Securities |
| Franklin High Yield |
Us Government and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Franklin High
The main advantage of trading using opposite Us Government and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. SCOR PK | Us Government vs. Morningstar Unconstrained Allocation | Us Government vs. Via Renewables | Us Government vs. Bondbloxx ETF Trust |
| Franklin High vs. Sit Government Securities | Franklin High vs. Us Government Securities | Franklin High vs. Virtus Seix Government | Franklin High vs. Schwab Government Money |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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