Correlation Between Evaluator Conservative and Franklin California

Can any of the company-specific risk be diversified away by investing in both Evaluator Conservative 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 Evaluator Conservative and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evaluator Conservative Rms and Franklin California Tax Free, you can compare the effects of market volatilities on Evaluator Conservative 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 Evaluator Conservative with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evaluator Conservative and Franklin California.

Diversification Opportunities for Evaluator Conservative and Franklin California

0.66

Correlation Coefficient

Evaluator Conservative  Franklin California

Poor diversification

The 3 months correlation between Evaluator and Franklin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Evaluator Conservative Rms and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Evaluator Conservative 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 Evaluator Conservative Rms 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 Tax has no effect on the direction of Evaluator Conservative i.e., Evaluator Conservative and Franklin California go up and down completely randomly.

Pair Corralation between Evaluator Conservative and Franklin California

Assuming the 90 days horizon Evaluator Conservative Rms is expected to generate 0.85 times more return on investment than Franklin California. However, Evaluator Conservative Rms is 1.17 times less risky than Franklin California. It trades about 0.09 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.03 per unit of risk. If you would invest  984.00  in Evaluator Conservative Rms on September 12, 2024 and sell it today you would earn a total of  12.00  from holding Evaluator Conservative Rms or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Evaluator Conservative Rms  vs.  Franklin California Tax Free

Evaluator Conservative

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evaluator Conservative Rms are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Evaluator Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin California Tax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin California Tax Free are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evaluator Conservative and Franklin California

The main advantage of trading using opposite Evaluator Conservative and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evaluator Conservative 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.

The idea behind Evaluator Conservative Rms and Franklin California Tax Free pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.