Correlation Between California Bond and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both California Bond and Franklin Mutual 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 Mutual 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 Mutual Shares, you can compare the effects of market volatilities on California Bond and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Franklin Mutual.
Diversification Opportunities for California Bond and Franklin Mutual
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Franklin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Shares has no effect on the direction of California Bond i.e., California Bond and Franklin Mutual go up and down completely randomly.
Pair Corralation between California Bond and Franklin Mutual
Assuming the 90 days horizon California Bond is expected to generate 3.31 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, California Bond Fund is 2.67 times less risky than Franklin Mutual. It trades about 0.07 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,301 in Franklin Mutual Shares on September 2, 2024 and sell it today you would earn a total of 595.00 from holding Franklin Mutual Shares or generate 25.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Franklin Mutual Shares
Performance |
| Timeline |
| California Bond |
| Franklin Mutual Shares |
California Bond and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Franklin Mutual
The main advantage of trading using opposite California Bond and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| California Bond vs. Tiaa Cref Lifestyle Moderate | California Bond vs. Fidelity Managed Retirement | California Bond vs. Transamerica Cleartrack Retirement | California Bond vs. Dimensional Retirement Income |
| Franklin Mutual vs. Ab Small Cap | Franklin Mutual vs. Fisher Small Cap | Franklin Mutual vs. Vanguard Small Cap Growth | Franklin Mutual vs. Legg Mason Partners |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |