Correlation Between Franklin Floating and INVESCO 2

Can any of the company-specific risk be diversified away by investing in both Franklin Floating and INVESCO 2 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 Floating and INVESCO 2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Floating Rate and INVESCO 2 BOND, you can compare the effects of market volatilities on Franklin Floating and INVESCO 2 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 Floating with a short position of INVESCO 2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Floating and INVESCO 2.

Diversification Opportunities for Franklin Floating and INVESCO 2

0.0

Correlation Coefficient

Franklin Floating  INVESCO 2

Pay attention - limited upside

The 3 months correlation between Franklin and INVESCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and INVESCO 2 BOND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVESCO 2 BOND and Franklin Floating 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 Floating Rate are associated (or correlated) with INVESCO 2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVESCO 2 BOND has no effect on the direction of Franklin Floating i.e., Franklin Floating and INVESCO 2 go up and down completely randomly.

Pair Corralation between Franklin Floating and INVESCO 2

If you would invest  1,810  in Franklin Floating Rate on September 16, 2024 and sell it today you would earn a total of  43.00  from holding Franklin Floating Rate or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Franklin Floating Rate  vs.  INVESCO 2 BOND

Franklin Floating Rate

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INVESCO 2 BOND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INVESCO 2 BOND has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, INVESCO 2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Floating and INVESCO 2

The main advantage of trading using opposite Franklin Floating and INVESCO 2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Floating position performs unexpectedly, INVESCO 2 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 INVESCO 2 will offset losses from the drop in INVESCO 2's long position.

The idea behind Franklin Floating Rate and INVESCO 2 BOND 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.