Correlation Between California Bond and Franklin New
Can any of the company-specific risk be diversified away by investing in both California Bond and Franklin New 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 New 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 New York, you can compare the effects of market volatilities on California Bond and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Franklin New.
Diversification Opportunities for California Bond and Franklin New
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between California and Franklin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of California Bond i.e., California Bond and Franklin New go up and down completely randomly.
Pair Corralation between California Bond and Franklin New
Assuming the 90 days horizon California Bond Fund is expected to generate 0.99 times more return on investment than Franklin New. However, California Bond Fund is 1.01 times less risky than Franklin New. It trades about 0.18 of its potential returns per unit of risk. Franklin New York is currently generating about 0.15 per unit of risk. If you would invest 1,028 in California Bond Fund on November 28, 2024 and sell it today you would earn a total of 10.00 from holding California Bond Fund or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Franklin New York
Performance |
| Timeline |
| California Bond |
| Franklin New York |
California Bond and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Franklin New
The main advantage of trading using opposite California Bond and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| California Bond vs. Vy Blackrock Inflation | California Bond vs. Simt Multi Asset Inflation | California Bond vs. Credit Suisse Multialternative | California Bond vs. Ab Bond Inflation |
| Franklin New vs. Doubleline Emerging Markets | Franklin New vs. Artisan High Income | Franklin New vs. Rbc Bluebay Emerging | Franklin New vs. Ultra Short Fixed Income |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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