Correlation Between American High and Franklin High
Can any of the company-specific risk be diversified away by investing in both American High and Franklin High 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 American High and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Franklin High Yield, you can compare the effects of market volatilities on American High and Franklin High 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 American High with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High and Franklin High.
Diversification Opportunities for American High and Franklin High
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield and American High 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 American High Income Municipal are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of American High i.e., American High and Franklin High go up and down completely randomly.
Pair Corralation between American High and Franklin High
Assuming the 90 days horizon American High Income Municipal is expected to generate about the same return on investment as Franklin High Yield. But, American High Income Municipal is 1.03 times less risky than Franklin High. It trades about -0.04 of its potential returns per unit of risk. Franklin High Yield is currently generating about -0.04 per unit of risk. If you would invest 893.00 in Franklin High Yield on January 20, 2024 and sell it today you would lose (3.00) from holding Franklin High Yield or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Franklin High Yield
Performance |
| Timeline |
| American High Me |
| Franklin High Yield |
American High and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High and Franklin High
The main advantage of trading using opposite American High and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| American High vs. Income Fund Of | American High vs. New World Fund | American High vs. American Mutual Fund | American High vs. American Mutual Fund |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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