Correlation Between Franklin and Columbia Strategic

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

By analyzing existing cross correlation between Franklin Government Money and Columbia Strategic Income, you can compare the effects of market volatilities on Franklin and Columbia Strategic 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 Franklin with a short position of Columbia Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Columbia Strategic.

Diversification Opportunities for Franklin and Columbia Strategic

0.0

Correlation Coefficient

Franklin  Columbia Strategic

Pay attention - limited upside

The 3 months correlation between Franklin and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Columbia Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Strategic Income and Franklin 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 Franklin Government Money are associated (or correlated) with Columbia Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Strategic Income has no effect on the direction of Franklin i.e., Franklin and Columbia Strategic go up and down completely randomly.

Pair Corralation between Franklin and Columbia Strategic

If you would invest  2,086  in Columbia Strategic Income on December 23, 2024 and sell it today you would earn a total of  53.00  from holding Columbia Strategic Income or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Franklin Government Money  vs.  Columbia Strategic Income

Franklin Government Money

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Strategic Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Strategic Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin and Columbia Strategic

The main advantage of trading using opposite Franklin and Columbia Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Columbia Strategic 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 Columbia Strategic will offset losses from the drop in Columbia Strategic's long position.

The idea behind Franklin Government Money and Columbia Strategic Income 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.