Correlation Between Short Duration and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Short Duration and Franklin Federal 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 Short Duration and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and Franklin Federal Limited Term, you can compare the effects of market volatilities on Short Duration and Franklin Federal 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 Short Duration with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Franklin Federal.
Diversification Opportunities for Short Duration and Franklin Federal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Short and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Short Duration 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 Short Duration Inflation are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Short Duration i.e., Short Duration and Franklin Federal go up and down completely randomly.
Pair Corralation between Short Duration and Franklin Federal
Assuming the 90 days horizon Short Duration Inflation is expected to generate 1.97 times more return on investment than Franklin Federal. However, Short Duration is 1.97 times more volatile than Franklin Federal Limited Term. It trades about 0.35 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.38 per unit of risk. If you would invest 1,064 in Short Duration Inflation on May 31, 2025 and sell it today you would earn a total of 13.00 from holding Short Duration Inflation or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Short Duration Inflation |
| Franklin Federal Lim |
Short Duration and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Franklin Federal
The main advantage of trading using opposite Short Duration and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Short Duration vs. Tactical Multi Purpose Fund | Short Duration vs. Siit Large Cap | Short Duration vs. Tax Managed Large Cap | Short Duration vs. Qs Moderate Growth |
| Franklin Federal vs. T Rowe Price | Franklin Federal vs. Siit Emerging Markets | Franklin Federal vs. Pioneer High Yield | Franklin Federal vs. Multisector Bond Sma |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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