Correlation Between Franklin Colorado and Maryland Tax-free

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

By analyzing existing cross correlation between Franklin Orado Tax Free and Maryland Tax Free Bond, you can compare the effects of market volatilities on Franklin Colorado and Maryland Tax-free 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 Colorado with a short position of Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Colorado and Maryland Tax-free.

Diversification Opportunities for Franklin Colorado and Maryland Tax-free

0.97

Correlation Coefficient

Franklin Colorado  Maryland Tax-free

Almost no diversification

The 3 months correlation between Franklin and Maryland is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Orado Tax Free and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free and Franklin Colorado 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 Orado Tax Free are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Franklin Colorado i.e., Franklin Colorado and Maryland Tax-free go up and down completely randomly.

Pair Corralation between Franklin Colorado and Maryland Tax-free

Assuming the 90 days horizon Franklin Colorado is expected to generate 1.28 times less return on investment than Maryland Tax-free. But when comparing it to its historical volatility, Franklin Orado Tax Free is 1.13 times less risky than Maryland Tax-free. It trades about 0.06 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,014  in Maryland Tax Free Bond on September 4, 2024 and sell it today you would earn a total of  11.00  from holding Maryland Tax Free Bond or generate 1.08% return on investment over 90 days.

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

Franklin Orado Tax Free  vs.  Maryland Tax Free Bond

Franklin Orado Tax

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Orado Tax Free are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin Colorado is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maryland Tax Free

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maryland Tax Free Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Maryland Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Colorado and Maryland Tax-free

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

The idea behind Franklin Orado Tax Free and Maryland Tax Free 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.