Correlation Between Franklin Small and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Franklin Growth 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 Franklin Growth 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 Franklin Growth Opportunities, you can compare the effects of market volatilities on Franklin Small and Franklin Growth 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 Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Franklin Growth.
Diversification Opportunities for Franklin Small and Franklin Growth
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo 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 Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Franklin Small i.e., Franklin Small and Franklin Growth go up and down completely randomly.
Pair Corralation between Franklin Small and Franklin Growth
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.05 times more return on investment than Franklin Growth. However, Franklin Small is 1.05 times more volatile than Franklin Growth Opportunities. It trades about 0.15 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.14 per unit of risk. If you would invest 1,361 in Franklin Small Cap on November 3, 2024 and sell it today you would earn a total of 319.00 from holding Franklin Small Cap or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Franklin Small Cap |
| Franklin Growth Oppo |
Franklin Small and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Franklin Growth
The main advantage of trading using opposite Franklin Small and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Franklin Small vs. Angel Oak Financial | Franklin Small vs. Touchstone Ultra Short | Franklin Small vs. Ab Global Bond | Franklin Small vs. Ab Bond Inflation |
| Franklin Growth vs. Rbb Fund | Franklin Growth vs. L Abbett Growth | Franklin Growth vs. Fm Investments Large | Franklin Growth vs. Qs Global Equity |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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