Correlation Between Franklin Small and Delaware Healthcare
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Delaware Healthcare 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 Delaware Healthcare 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 Delaware Healthcare Fund, you can compare the effects of market volatilities on Franklin Small and Delaware Healthcare 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 Delaware Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Delaware Healthcare.
Diversification Opportunities for Franklin Small and Delaware Healthcare
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Delaware is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Delaware Healthcare Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Healthcare 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 Delaware Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Healthcare has no effect on the direction of Franklin Small i.e., Franklin Small and Delaware Healthcare go up and down completely randomly.
Pair Corralation between Franklin Small and Delaware Healthcare
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.3 times more return on investment than Delaware Healthcare. However, Franklin Small is 1.3 times more volatile than Delaware Healthcare Fund. It trades about 0.22 of its potential returns per unit of risk. Delaware Healthcare Fund is currently generating about 0.2 per unit of risk. If you would invest 1,611 in Franklin Small Cap on November 4, 2024 and sell it today you would earn a total of 69.00 from holding Franklin Small Cap or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Delaware Healthcare Fund
Performance |
| Timeline |
| Franklin Small Cap |
| Delaware Healthcare |
Franklin Small and Delaware Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Delaware Healthcare
The main advantage of trading using opposite Franklin Small and Delaware Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Delaware Healthcare 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 Delaware Healthcare will offset losses from the drop in Delaware Healthcare's long position.| Franklin Small vs. Federated Hermes Conservative | Franklin Small vs. Jpmorgan Diversified Fund | Franklin Small vs. Wilmington Diversified Income | Franklin Small vs. Fulcrum Diversified Absolute |
| Delaware Healthcare vs. Aqr Equity Market | Delaware Healthcare vs. Old Westbury Short Term | Delaware Healthcare vs. Ashmore Emerging Markets | Delaware Healthcare vs. Federated Emerging Market |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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