Correlation Between Salient Tactical and Franklin Oregon

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

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

Diversification Opportunities for Salient Tactical and Franklin Oregon

0.44

Correlation Coefficient

Salient Tactical  Franklin Oregon

Very weak diversification

The 3 months correlation between Salient and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Salient Tactical Growth and Franklin Oregon Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Oregon Tax and Salient Tactical 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 Salient Tactical Growth are associated (or correlated) with Franklin Oregon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Oregon Tax has no effect on the direction of Salient Tactical i.e., Salient Tactical and Franklin Oregon go up and down completely randomly.

Pair Corralation between Salient Tactical and Franklin Oregon

Assuming the 90 days horizon Salient Tactical Growth is expected to generate 1.38 times more return on investment than Franklin Oregon. However, Salient Tactical is 1.38 times more volatile than Franklin Oregon Tax Free. It trades about -0.02 of its potential returns per unit of risk. Franklin Oregon Tax Free is currently generating about -0.09 per unit of risk. If you would invest  2,462  in Salient Tactical Growth on December 30, 2024 and sell it today you would lose (10.00) from holding Salient Tactical Growth or give up 0.41% of portfolio value over 90 days.

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

Salient Tactical Growth  vs.  Franklin Oregon Tax Free

Salient Tactical Growth

Risk-Adjusted Performance

Very Weak

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

Franklin Oregon Tax

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Salient Tactical and Franklin Oregon

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

The idea behind Salient Tactical Growth and Franklin Oregon 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.