Correlation Between Ab Select and Franklin Microcap
Can any of the company-specific risk be diversified away by investing in both Ab Select and Franklin Microcap 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 Ab Select and Franklin Microcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Longshort and Franklin Microcap Value, you can compare the effects of market volatilities on Ab Select and Franklin Microcap 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 Ab Select with a short position of Franklin Microcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Franklin Microcap.
Diversification Opportunities for Ab Select and Franklin Microcap
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ASCLX and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Longshort and Franklin Microcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Microcap Value and Ab Select 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 Ab Select Longshort are associated (or correlated) with Franklin Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Microcap Value has no effect on the direction of Ab Select i.e., Ab Select and Franklin Microcap go up and down completely randomly.
Pair Corralation between Ab Select and Franklin Microcap
Assuming the 90 days horizon Ab Select Longshort is expected to generate 0.35 times more return on investment than Franklin Microcap. However, Ab Select Longshort is 2.82 times less risky than Franklin Microcap. It trades about 0.12 of its potential returns per unit of risk. Franklin Microcap Value is currently generating about 0.03 per unit of risk. If you would invest 1,088 in Ab Select Longshort on September 3, 2024 and sell it today you would earn a total of 320.00 from holding Ab Select Longshort or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Longshort vs. Franklin Microcap Value
Performance |
| Timeline |
| Ab Select Longshort |
| Franklin Microcap Value |
Ab Select and Franklin Microcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Franklin Microcap
The main advantage of trading using opposite Ab Select and Franklin Microcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Franklin Microcap 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 Microcap will offset losses from the drop in Franklin Microcap's long position.| Ab Select vs. Vanguard Financials Index | Ab Select vs. Davis Financial Fund | Ab Select vs. Icon Financial Fund | Ab Select vs. Blackrock Financial Institutions |
| Franklin Microcap vs. Vanguard Small Cap Value | Franklin Microcap vs. Vanguard Small Cap Value | Franklin Microcap vs. Us Small Cap | Franklin Microcap vs. Us Targeted Value |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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