Correlation Between Franklin Federal and Large Cap
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Large Cap 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 Federal and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Large Cap Growth Profund, you can compare the effects of market volatilities on Franklin Federal and Large Cap 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 Federal with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Large Cap.
Diversification Opportunities for Franklin Federal and Large Cap
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Large is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Franklin Federal i.e., Franklin Federal and Large Cap go up and down completely randomly.
Pair Corralation between Franklin Federal and Large Cap
Assuming the 90 days horizon Franklin Federal Limited Term is expected to under-perform the Large Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Federal Limited Term is 9.14 times less risky than Large Cap. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Large Cap Growth Profund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,256 in Large Cap Growth Profund on October 7, 2024 and sell it today you would earn a total of 377.00 from holding Large Cap Growth Profund or generate 8.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Federal Limited Term vs. Large Cap Growth Profund
Performance |
Timeline |
Franklin Federal Lim |
Large Cap Growth |
Franklin Federal and Large Cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Federal and Large Cap
The main advantage of trading using opposite Franklin Federal and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.Franklin Federal vs. Nebraska Municipal Fund | Franklin Federal vs. T Rowe Price | Franklin Federal vs. Ishares Municipal Bond | Franklin Federal vs. Bbh Intermediate Municipal |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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