Correlation Between Franklin Pennsylvania and The Hartford

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Can any of the company-specific risk be diversified away by investing in both Franklin Pennsylvania and The Hartford 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 Pennsylvania and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Pennsylvania Tax Free and The Hartford Dividend, you can compare the effects of market volatilities on Franklin Pennsylvania and The Hartford 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 Pennsylvania with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Pennsylvania and The Hartford.

Diversification Opportunities for Franklin Pennsylvania and The Hartford

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Franklin and The is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Pennsylvania Tax Free and The Hartford Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Dividend and Franklin Pennsylvania 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 Pennsylvania Tax Free are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Dividend has no effect on the direction of Franklin Pennsylvania i.e., Franklin Pennsylvania and The Hartford go up and down completely randomly.

Pair Corralation between Franklin Pennsylvania and The Hartford

Assuming the 90 days horizon Franklin Pennsylvania is expected to generate 5.12 times less return on investment than The Hartford. But when comparing it to its historical volatility, Franklin Pennsylvania Tax Free is 1.93 times less risky than The Hartford. It trades about 0.05 of its potential returns per unit of risk. The Hartford Dividend is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,588  in The Hartford Dividend on September 10, 2024 and sell it today you would earn a total of  169.00  from holding The Hartford Dividend or generate 4.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Pennsylvania Tax Free  vs.  The Hartford Dividend

 Performance 
       Timeline  
Franklin Pennsylvania 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Pennsylvania Tax Free 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 Pennsylvania is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hartford Dividend 

Risk-Adjusted Performance

11 of 100

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

Franklin Pennsylvania and The Hartford Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Pennsylvania and The Hartford

The main advantage of trading using opposite Franklin Pennsylvania and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Pennsylvania position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.
The idea behind Franklin Pennsylvania Tax Free and The Hartford Dividend 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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