Correlation Between Ishares Municipal and Franklin Adjustable
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Franklin Adjustable 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 Ishares Municipal and Franklin Adjustable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Franklin Adjustable Government, you can compare the effects of market volatilities on Ishares Municipal and Franklin Adjustable 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 Ishares Municipal with a short position of Franklin Adjustable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Franklin Adjustable.
Diversification Opportunities for Ishares Municipal and Franklin Adjustable
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ishares and FRANKLIN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Franklin Adjustable go up and down completely randomly.
Pair Corralation between Ishares Municipal and Franklin Adjustable
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 1.61 times more return on investment than Franklin Adjustable. However, Ishares Municipal is 1.61 times more volatile than Franklin Adjustable Government. It trades about 0.23 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.23 per unit of risk. If you would invest 1,058 in Ishares Municipal Bond on June 11, 2025 and sell it today you would earn a total of 25.00 from holding Ishares Municipal Bond or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Franklin Adjustable Government
Performance |
| Timeline |
| Ishares Municipal Bond |
| Franklin Adjustable |
Ishares Municipal and Franklin Adjustable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Franklin Adjustable
The main advantage of trading using opposite Ishares Municipal and Franklin Adjustable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Franklin Adjustable 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 Adjustable will offset losses from the drop in Franklin Adjustable's long position.| Ishares Municipal vs. Wesmark Government Bond | Ishares Municipal vs. Davis Government Bond | Ishares Municipal vs. Federated Government Income | Ishares Municipal vs. Franklin Adjustable Government |
| Franklin Adjustable vs. Franklin Mutual Beacon | Franklin Adjustable vs. Templeton Developing Markets | Franklin Adjustable vs. Franklin Mutual Global | Franklin Adjustable vs. Franklin Mutual Global |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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