Correlation Between Visa and Franklin Minnesota

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

By analyzing existing cross correlation between Visa Class A and Franklin Minnesota Tax Free, you can compare the effects of market volatilities on Visa and Franklin Minnesota 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 Visa with a short position of Franklin Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Franklin Minnesota.

Diversification Opportunities for Visa and Franklin Minnesota

-0.23

Correlation Coefficient

Visa  Franklin Minnesota

Very good diversification

The 3 months correlation between Visa and Franklin is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Franklin Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Minnesota Tax and Visa 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 Visa Class A are associated (or correlated) with Franklin Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Minnesota Tax has no effect on the direction of Visa i.e., Visa and Franklin Minnesota go up and down completely randomly.

Pair Corralation between Visa and Franklin Minnesota

Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.59 times more return on investment than Franklin Minnesota. However, Visa is 4.59 times more volatile than Franklin Minnesota Tax Free. It trades about 0.16 of its potential returns per unit of risk. Franklin Minnesota Tax Free is currently generating about 0.07 per unit of risk. If you would invest  27,801  in Visa Class A on September 3, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Franklin Minnesota Tax Free

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Minnesota Tax

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Visa and Franklin Minnesota

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

The idea behind Visa Class A and Franklin Minnesota Tax Free 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.