Correlation Between Vanguard High and Franklin High
Can any of the company-specific risk be diversified away by investing in both Vanguard High 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 Vanguard High and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Corporate and Franklin High Income, you can compare the effects of market volatilities on Vanguard High 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 Vanguard High with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High and Franklin High.
Diversification Opportunities for Vanguard High and Franklin High
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Corporate and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Vanguard High 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 Vanguard High Yield Corporate 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 Income has no effect on the direction of Vanguard High i.e., Vanguard High and Franklin High go up and down completely randomly.
Pair Corralation between Vanguard High and Franklin High
Assuming the 90 days horizon Vanguard High Yield Corporate is expected to generate 0.62 times more return on investment than Franklin High. However, Vanguard High Yield Corporate is 1.6 times less risky than Franklin High. It trades about 0.22 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.0 per unit of risk. If you would invest 543.00 in Vanguard High Yield Corporate on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Vanguard High Yield Corporate or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Corporate vs. Franklin High Income
Performance |
| Timeline |
| Vanguard High Yield |
| Franklin High Income |
Vanguard High and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High and Franklin High
The main advantage of trading using opposite Vanguard High and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High 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.| Vanguard High vs. Vanguard Short Term Investment Grade | Vanguard High vs. Vanguard Intermediate Term Investment Grade | Vanguard High vs. Vanguard Gnma Fund | Vanguard High vs. Vanguard High Yield Tax Exempt |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
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 CEOs Directory module to screen CEOs from public companies around the world.
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