Correlation Between Franklin Federal and Moderately Aggressive
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Moderately Aggressive 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 Federal and Moderately Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Moderately Aggressive Balanced, you can compare the effects of market volatilities on Franklin Federal and Moderately Aggressive 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 Federal with a short position of Moderately Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Moderately Aggressive.
Diversification Opportunities for Franklin Federal and Moderately Aggressive
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Moderately is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Moderately Aggressive Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderately Aggressive and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Moderately Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderately Aggressive has no effect on the direction of Franklin Federal i.e., Franklin Federal and Moderately Aggressive go up and down completely randomly.
Pair Corralation between Franklin Federal and Moderately Aggressive
Assuming the 90 days horizon Franklin Federal is expected to generate 4.24 times less return on investment than Moderately Aggressive. But when comparing it to its historical volatility, Franklin Federal Limited Term is 6.22 times less risky than Moderately Aggressive. It trades about 0.33 of its potential returns per unit of risk. Moderately Aggressive Balanced is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,201 in Moderately Aggressive Balanced on May 30, 2025 and sell it today you would earn a total of 76.00 from holding Moderately Aggressive Balanced or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Moderately Aggressive Balanced
Performance |
| Timeline |
| Franklin Federal Lim |
| Moderately Aggressive |
Franklin Federal and Moderately Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Moderately Aggressive
The main advantage of trading using opposite Franklin Federal and Moderately Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Moderately Aggressive 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 Moderately Aggressive will offset losses from the drop in Moderately Aggressive's long position.| Franklin Federal vs. Astor Longshort Fund | Franklin Federal vs. Barings Active Short | Franklin Federal vs. Abr Enhanced Short | Franklin Federal vs. Lord Abbett Short |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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