Correlation Between Franklin High and Aig Government
Can any of the company-specific risk be diversified away by investing in both Franklin High and Aig Government 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 High and Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Aig Government Money, you can compare the effects of market volatilities on Franklin High and Aig Government 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 High with a short position of Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Aig Government.
Diversification Opportunities for Franklin High and Aig Government
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Aig is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money and Franklin High 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 High Income are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of Franklin High i.e., Franklin High and Aig Government go up and down completely randomly.
Pair Corralation between Franklin High and Aig Government
Assuming the 90 days horizon Franklin High Income is expected to generate 1.66 times more return on investment than Aig Government. However, Franklin High is 1.66 times more volatile than Aig Government Money. It trades about 0.15 of its potential returns per unit of risk. Aig Government Money is currently generating about 0.09 per unit of risk. If you would invest 151.00 in Franklin High Income on September 26, 2024 and sell it today you would earn a total of 24.00 from holding Franklin High Income or generate 15.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin High Income vs. Aig Government Money
Performance |
Timeline |
Franklin High Income |
Aig Government Money |
Franklin High and Aig Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin High and Aig Government
The main advantage of trading using opposite Franklin High and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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