Correlation Between California Bond and Franklin California
Can any of the company-specific risk be diversified away by investing in both California Bond and Franklin California 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 California Bond and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Franklin California High, you can compare the effects of market volatilities on California Bond and Franklin California 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 California Bond with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Franklin California.
Diversification Opportunities for California Bond and Franklin California
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High and California Bond 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 California Bond Fund are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of California Bond i.e., California Bond and Franklin California go up and down completely randomly.
Pair Corralation between California Bond and Franklin California
Assuming the 90 days horizon California Bond is expected to generate 1.25 times less return on investment than Franklin California. In addition to that, California Bond is 1.03 times more volatile than Franklin California High. It trades about 0.02 of its total potential returns per unit of risk. Franklin California High is currently generating about 0.03 per unit of volatility. If you would invest 996.00 in Franklin California High on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Franklin California High or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.82% |
| Values | Daily Returns |
California Bond Fund vs. Franklin California High
Performance |
| Timeline |
| California Bond |
| Franklin California High |
California Bond and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Franklin California
The main advantage of trading using opposite California Bond and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| California Bond vs. Goldman Sachs Growth | California Bond vs. Smallcap Growth Fund | California Bond vs. L Abbett Growth | California Bond vs. Small Pany Growth |
| Franklin California vs. Lord Abbett Emerging | Franklin California vs. Janus Investment | Franklin California vs. Aig Government Money | Franklin California vs. John Hancock 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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