Correlation Between Franklin Small and Baird Small/mid
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Baird Small/mid 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 Franklin Small and Baird Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Cap and Baird Smallmid Cap, you can compare the effects of market volatilities on Franklin Small and Baird Small/mid 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 Franklin Small with a short position of Baird Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Baird Small/mid.
Diversification Opportunities for Franklin Small and Baird Small/mid
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Baird is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Baird Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Smallmid Cap and Franklin Small 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 Franklin Small Cap are associated (or correlated) with Baird Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Smallmid Cap has no effect on the direction of Franklin Small i.e., Franklin Small and Baird Small/mid go up and down completely randomly.
Pair Corralation between Franklin Small and Baird Small/mid
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.27 times more return on investment than Baird Small/mid. However, Franklin Small is 1.27 times more volatile than Baird Smallmid Cap. It trades about 0.27 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.31 per unit of risk. If you would invest 1,609 in Franklin Small Cap on October 25, 2024 and sell it today you would earn a total of 80.00 from holding Franklin Small Cap or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Franklin Small Cap vs. Baird Smallmid Cap
Performance |
| Timeline |
| Franklin Small Cap |
| Baird Smallmid Cap |
Franklin Small and Baird Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Baird Small/mid
The main advantage of trading using opposite Franklin Small and Baird Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Baird Small/mid 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 Baird Small/mid will offset losses from the drop in Baird Small/mid's long position.| Franklin Small vs. Putnam International Capital | Franklin Small vs. Putnam Small Cap | Franklin Small vs. Putnam Equity Income | Franklin Small vs. Putnam Growth Opportunities |
| Baird Small/mid vs. Ab Small Cap | Baird Small/mid vs. Buffalo Small Cap | Baird Small/mid vs. Franklin Small Cap | Baird Small/mid vs. Df Dent Small |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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