Correlation Between Franklin and Us Government
Can any of the company-specific risk be diversified away by investing in both Franklin and Us 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 and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Securities and Us Government Securities, you can compare the effects of market volatilities on Franklin and Us 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 with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Us Government.
Diversification Opportunities for Franklin and Us Government
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and CGTFX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Securities and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Franklin 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 Government Securities are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Franklin i.e., Franklin and Us Government go up and down completely randomly.
Pair Corralation between Franklin and Us Government
Assuming the 90 days horizon Franklin Government Securities is expected to generate 1.0 times more return on investment than Us Government. However, Franklin is 1.0 times more volatile than Us Government Securities. It trades about 0.03 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.02 per unit of risk. If you would invest 500.00 in Franklin Government Securities on May 2, 2025 and sell it today you would earn a total of 3.00 from holding Franklin Government Securities or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Securities vs. Us Government Securities
Performance |
| Timeline |
| Franklin Government |
| Us Government Securities |
Franklin and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Us Government
The main advantage of trading using opposite Franklin and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Us 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 Us Government will offset losses from the drop in Us Government's long position.| Franklin vs. Tiaa Cref Lifecycle Retirement | Franklin vs. Lifestyle Ii Moderate | Franklin vs. Deutsche Multi Asset Moderate | Franklin vs. Dimensional Retirement Income |
| Us Government vs. Old Westbury Small | Us Government vs. Federated Mdt Small | Us Government vs. Qs Small Capitalization | Us Government vs. Jhvit International Small |
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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