Correlation Between Baird Small/mid and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Franklin Mutual 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 Baird Small/mid and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Franklin Mutual Shares, you can compare the effects of market volatilities on Baird Small/mid and Franklin Mutual 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 Baird Small/mid with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Franklin Mutual.
Diversification Opportunities for Baird Small/mid and Franklin Mutual
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and Baird Small/mid 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 Baird Smallmid Cap are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Shares has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Franklin Mutual go up and down completely randomly.
Pair Corralation between Baird Small/mid and Franklin Mutual
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.48 times more return on investment than Franklin Mutual. However, Baird Small/mid is 1.48 times more volatile than Franklin Mutual Shares. It trades about 0.41 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.35 per unit of risk. If you would invest 1,615 in Baird Smallmid Cap on September 1, 2024 and sell it today you would earn a total of 180.00 from holding Baird Smallmid Cap or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Franklin Mutual Shares
Performance |
| Timeline |
| Baird Smallmid Cap |
| Franklin Mutual Shares |
Baird Small/mid and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Franklin Mutual
The main advantage of trading using opposite Baird Small/mid and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Short Term Bond | Baird Small/mid vs. Baird Short Term Bond |
| Franklin Mutual vs. The Hartford Small | Franklin Mutual vs. Ab Small Cap | Franklin Mutual vs. Baird Smallmid Cap | Franklin Mutual vs. Artisan Small Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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