Correlation Between Franklin Small and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Putnam Convertible 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 Putnam Convertible 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 Putnam Convertible Securities, you can compare the effects of market volatilities on Franklin Small and Putnam Convertible 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 Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Putnam Convertible.
Diversification Opportunities for Franklin Small and Putnam Convertible
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Putnam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Putnam Convertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible 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 Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible has no effect on the direction of Franklin Small i.e., Franklin Small and Putnam Convertible go up and down completely randomly.
Pair Corralation between Franklin Small and Putnam Convertible
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.54 times more return on investment than Putnam Convertible. However, Franklin Small is 1.54 times more volatile than Putnam Convertible Securities. It trades about 0.18 of its potential returns per unit of risk. Putnam Convertible Securities is currently generating about 0.14 per unit of risk. If you would invest 1,619 in Franklin Small Cap on November 6, 2024 and sell it today you would earn a total of 61.00 from holding Franklin Small Cap or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Putnam Convertible Securities
Performance |
| Timeline |
| Franklin Small Cap |
| Putnam Convertible |
Franklin Small and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Putnam Convertible
The main advantage of trading using opposite Franklin Small and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Putnam Convertible 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 Putnam Convertible will offset losses from the drop in Putnam Convertible's long position.| Franklin Small vs. Lebenthal Lisanti Small | Franklin Small vs. Jhvit International Small | Franklin Small vs. Federated Kaufmann Small | Franklin Small vs. Kinetics Small Cap |
| Putnam Convertible vs. Rationalpier 88 Convertible | Putnam Convertible vs. Calamos Dynamic Convertible | Putnam Convertible vs. Advent Claymore Convertible | Putnam Convertible vs. Fidelity Sai Convertible |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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