Correlation Between General Money and Franklin
Can any of the company-specific risk be diversified away by investing in both General Money and Franklin 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 General Money and Franklin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Franklin Government Money, you can compare the effects of market volatilities on General Money and Franklin 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 General Money with a short position of Franklin. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Franklin.
Diversification Opportunities for General Money and Franklin
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between General and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and General Money 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 General Money Market are associated (or correlated) with Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of General Money i.e., General Money and Franklin go up and down completely randomly.
Pair Corralation between General Money and Franklin
Assuming the 90 days horizon General Money is expected to generate 1.05 times less return on investment than Franklin. But when comparing it to its historical volatility, General Money Market is 1.02 times less risky than Franklin. It trades about 0.13 of its potential returns per unit of risk. Franklin Government Money is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Franklin Government Money on April 24, 2025 and sell it today you would earn a total of 1.00 from holding Franklin Government Money or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.31% |
| Values | Daily Returns |
General Money Market vs. Franklin Government Money
Performance |
| Timeline |
| General Money Market |
| Franklin Government Money |
General Money and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Franklin
The main advantage of trading using opposite General Money and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.| General Money vs. International Investors Gold | General Money vs. Global Gold Fund | General Money vs. Franklin Gold Precious | General Money vs. Europac Gold Fund |
| Franklin vs. Vanguard Small Cap Value | Franklin vs. Foundry Partners Fundamental | Franklin vs. Lsv Small Cap | Franklin vs. Fpa Queens Road |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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