Correlation Between Small-cap Value and Franklin High
Can any of the company-specific risk be diversified away by investing in both Small-cap Value 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 Small-cap Value and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Fund and Franklin High Income, you can compare the effects of market volatilities on Small-cap Value 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 Small-cap Value with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Franklin High.
Diversification Opportunities for Small-cap Value and Franklin High
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small-cap and Franklin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and Small-cap Value 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 Small Cap Value Fund 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 Income has no effect on the direction of Small-cap Value i.e., Small-cap Value and Franklin High go up and down completely randomly.
Pair Corralation between Small-cap Value and Franklin High
Assuming the 90 days horizon Small Cap Value Fund is expected to generate 5.44 times more return on investment than Franklin High. However, Small-cap Value is 5.44 times more volatile than Franklin High Income. It trades about 0.06 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.14 per unit of risk. If you would invest 3,838 in Small Cap Value Fund on September 3, 2024 and sell it today you would earn a total of 533.00 from holding Small Cap Value Fund or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Fund vs. Franklin High Income
Performance |
| Timeline |
| Small Cap Value |
| Franklin High Income |
Small-cap Value and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Franklin High
The main advantage of trading using opposite Small-cap Value and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value 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.| Small-cap Value vs. Ab Bond Inflation | Small-cap Value vs. Ms Global Fixed | Small-cap Value vs. Limited Term Tax | Small-cap Value vs. T Rowe Price |
| Franklin High vs. Vanguard High Yield Corporate | Franklin High vs. Vanguard High Yield Porate | Franklin High vs. Blackrock Hi Yld | Franklin High vs. Blackrock High Yield |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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