Correlation Between Aston/crosswind Small and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Aston/crosswind Small and Franklin Small 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 Aston/crosswind Small and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astoncrosswind Small Cap and Franklin Small Cap, you can compare the effects of market volatilities on Aston/crosswind Small and Franklin Small 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 Aston/crosswind Small with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston/crosswind Small and Franklin Small.
Diversification Opportunities for Aston/crosswind Small and Franklin Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aston/Crosswind and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Astoncrosswind Small Cap and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap and Aston/crosswind Small 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 Astoncrosswind Small Cap are associated (or correlated) with Franklin Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Cap has no effect on the direction of Aston/crosswind Small i.e., Aston/crosswind Small and Franklin Small go up and down completely randomly.
Pair Corralation between Aston/crosswind Small and Franklin Small
Assuming the 90 days horizon Astoncrosswind Small Cap is expected to under-perform the Franklin Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Astoncrosswind Small Cap is 1.13 times less risky than Franklin Small. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Franklin Small Cap is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,717 in Franklin Small Cap on October 25, 2024 and sell it today you would lose (32.00) from holding Franklin Small Cap or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astoncrosswind Small Cap vs. Franklin Small Cap
Performance |
| Timeline |
| Astoncrosswind Small Cap |
| Franklin Small Cap |
Aston/crosswind Small and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aston/crosswind Small and Franklin Small
The main advantage of trading using opposite Aston/crosswind Small and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston/crosswind Small position performs unexpectedly, Franklin Small 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 Small will offset losses from the drop in Franklin Small's long position.| Aston/crosswind Small vs. Putnam International Capital | Aston/crosswind Small vs. Putnam Small Cap | Aston/crosswind Small vs. Putnam Equity Income | Aston/crosswind Small vs. Putnam Growth Opportunities |
| Franklin Small vs. Putnam International Capital | Franklin Small vs. Putnam Small Cap | Franklin Small vs. Putnam Equity Income | Franklin Small vs. Putnam Growth Opportunities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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