Correlation Between Omni Small-cap and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Omni Small-cap and Franklin Equity 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 Omni Small-cap and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omni Small Cap Value and Franklin Equity Income, you can compare the effects of market volatilities on Omni Small-cap and Franklin Equity 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 Omni Small-cap with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Franklin Equity.
Diversification Opportunities for Omni Small-cap and Franklin Equity
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Omni and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Omni Small-cap 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 Omni Small Cap Value are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Franklin Equity go up and down completely randomly.
Pair Corralation between Omni Small-cap and Franklin Equity
Assuming the 90 days horizon Omni Small-cap is expected to generate 1.51 times less return on investment than Franklin Equity. In addition to that, Omni Small-cap is 2.26 times more volatile than Franklin Equity Income. It trades about 0.02 of its total potential returns per unit of risk. Franklin Equity Income is currently generating about 0.07 per unit of volatility. If you would invest 2,847 in Franklin Equity Income on September 3, 2024 and sell it today you would earn a total of 755.00 from holding Franklin Equity Income or generate 26.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omni Small Cap Value vs. Franklin Equity Income
Performance |
| Timeline |
| Omni Small Cap |
| Franklin Equity Income |
Omni Small-cap and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small-cap and Franklin Equity
The main advantage of trading using opposite Omni Small-cap and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Omni Small-cap vs. Vanguard Small Cap Value | Omni Small-cap vs. Vanguard Small Cap Value | Omni Small-cap vs. Us Small Cap | Omni Small-cap vs. Us Targeted Value |
| Franklin Equity vs. Semiconductor Ultrasector Profund | Franklin Equity vs. T Rowe Price | Franklin Equity vs. Ab Small Cap | Franklin Equity vs. Omni Small Cap 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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