Correlation Between Franklin Small and Tax-managed
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Tax-managed 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 Tax-managed 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 Tax Managed Mid Small, you can compare the effects of market volatilities on Franklin Small and Tax-managed 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 Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Tax-managed.
Diversification Opportunities for Franklin Small and Tax-managed
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Tax-managed is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Tax Managed Mid Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Mid 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 Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Mid has no effect on the direction of Franklin Small i.e., Franklin Small and Tax-managed go up and down completely randomly.
Pair Corralation between Franklin Small and Tax-managed
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.07 times more return on investment than Tax-managed. However, Franklin Small is 1.07 times more volatile than Tax Managed Mid Small. It trades about 0.26 of its potential returns per unit of risk. Tax Managed Mid Small is currently generating about 0.14 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 76.00 from holding Franklin Small Cap or generate 4.72% 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. Tax Managed Mid Small
Performance |
| Timeline |
| Franklin Small Cap |
| Tax Managed Mid |
Franklin Small and Tax-managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Tax-managed
The main advantage of trading using opposite Franklin Small and Tax-managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Tax-managed 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 Tax-managed will offset losses from the drop in Tax-managed'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 |
| Tax-managed vs. Rbc Small Cap | Tax-managed vs. Franklin Small Cap | Tax-managed vs. Small Pany Growth | Tax-managed vs. Tax Managed Mid 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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