Correlation Between Franklin Small and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Baillie Gifford 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 Baillie Gifford 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 Baillie Gifford International, you can compare the effects of market volatilities on Franklin Small and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Baillie Gifford.
Diversification Opportunities for Franklin Small and Baillie Gifford
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Baillie is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Baillie Gifford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Inte 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 Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Inte has no effect on the direction of Franklin Small i.e., Franklin Small and Baillie Gifford go up and down completely randomly.
Pair Corralation between Franklin Small and Baillie Gifford
Assuming the 90 days horizon Franklin Small is expected to generate 1.04 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, Franklin Small Cap is 1.36 times less risky than Baillie Gifford. It trades about 0.28 of its potential returns per unit of risk. Baillie Gifford International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 771.00 in Baillie Gifford International on November 3, 2024 and sell it today you would earn a total of 48.00 from holding Baillie Gifford International or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Baillie Gifford International
Performance |
| Timeline |
| Franklin Small Cap |
| Baillie Gifford Inte |
Franklin Small and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Baillie Gifford
The main advantage of trading using opposite Franklin Small and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Franklin Small vs. Fidelity Advisor Technology | Franklin Small vs. Vanguard Information Technology | Franklin Small vs. Red Oak Technology | Franklin Small vs. Columbia Global Technology |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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