Correlation Between Franklin Federal and Mmojx

Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Mmojx 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 Mmojx 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 Mmojx, you can compare the effects of market volatilities on Franklin Federal and Mmojx 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 Mmojx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Mmojx.

Diversification Opportunities for Franklin Federal and Mmojx

0.21

Correlation Coefficient

Franklin Federal  Mmojx

Modest diversification

The 3 months correlation between Franklin and Mmojx is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Mmojx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmojx 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 Mmojx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmojx has no effect on the direction of Franklin Federal i.e., Franklin Federal and Mmojx go up and down completely randomly.

Pair Corralation between Franklin Federal and Mmojx

Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.07 times more return on investment than Mmojx. However, Franklin Federal Limited Term is 13.33 times less risky than Mmojx. It trades about -0.3 of its potential returns per unit of risk. Mmojx is currently generating about -0.27 per unit of risk. If you would invest  1,034  in Franklin Federal Limited Term on October 3, 2024 and sell it today you would lose (7.00) from holding Franklin Federal Limited Term or give up 0.68% of portfolio value 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.  Mmojx

Franklin Federal Lim

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mmojx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mmojx has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Franklin Federal and Mmojx

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

The idea behind Franklin Federal Limited Term and Mmojx 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 Global Correlations module to find global opportunities by holding instruments from different markets.