Correlation Between Ft 9331: and Franklin California

Can any of the company-specific risk be diversified away by investing in both Ft 9331: 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 Ft 9331: and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ft 9331 Corporate and Franklin California High, you can compare the effects of market volatilities on Ft 9331: 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 Ft 9331: with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ft 9331: and Franklin California.

Diversification Opportunities for Ft 9331: and Franklin California

0.66

Correlation Coefficient

Ft 9331:  Franklin California

Poor diversification

The 3 months correlation between FLQTVX and Franklin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ft 9331 Corporate 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 Ft 9331: 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 Ft 9331 Corporate 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 Ft 9331: i.e., Ft 9331: and Franklin California go up and down completely randomly.

Pair Corralation between Ft 9331: and Franklin California

Assuming the 90 days trading horizon Ft 9331 Corporate is expected to generate 0.7 times more return on investment than Franklin California. However, Ft 9331 Corporate is 1.43 times less risky than Franklin California. It trades about 0.15 of its potential returns per unit of risk. Franklin California High is currently generating about 0.06 per unit of risk. If you would invest  75,155  in Ft 9331 Corporate on December 21, 2024 and sell it today you would earn a total of  1,036  from holding Ft 9331 Corporate or generate 1.38% return on investment over 90 days.

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

Ft 9331 Corporate  vs.  Franklin California High

Ft 9331 Corporate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ft 9331 Corporate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ft 9331: is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Franklin California High

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin California High are ranked lower than 4 (%) 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 Ft 9331: and Franklin California

The main advantage of trading using opposite Ft 9331: and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ft 9331: 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 Ft 9331 Corporate and Franklin California High 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.