Correlation Between Small Cap and Franklin High
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 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 Yield, you can compare the effects of market volatilities on Small Cap 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 with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Franklin High.
Diversification Opportunities for Small Cap and Franklin High
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund 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 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 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 Yield has no effect on the direction of Small Cap i.e., Small Cap and Franklin High go up and down completely randomly.
Pair Corralation between Small Cap and Franklin High
Assuming the 90 days horizon Small Cap Value Fund is expected to generate 4.52 times more return on investment than Franklin High. However, Small Cap is 4.52 times more volatile than Franklin High Yield. It trades about 0.02 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.06 per unit of risk. If you would invest 3,400 in Small Cap Value Fund on September 28, 2024 and sell it today you would earn a total of 384.00 from holding Small Cap Value Fund or generate 11.29% 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 Yield
Performance |
| Timeline |
| Small Cap Value |
| Franklin High Yield |
Small Cap and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Franklin High
The main advantage of trading using opposite Small Cap and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.The idea behind Small Cap Value Fund and Franklin High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Franklin High vs. Ridgeworth Seix Government | Franklin High vs. Intermediate Government Bond | Franklin High vs. Us Government Plus | Franklin High vs. Aig Government Money |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |