Correlation Between Franklin Small and Prudential Qma
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Prudential Qma 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 Prudential Qma 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 Prudential Qma Strategic, you can compare the effects of market volatilities on Franklin Small and Prudential Qma 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 Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Prudential Qma.
Diversification Opportunities for Franklin Small and Prudential Qma
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Prudential is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Prudential Qma Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Strategic 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 Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Strategic has no effect on the direction of Franklin Small i.e., Franklin Small and Prudential Qma go up and down completely randomly.
Pair Corralation between Franklin Small and Prudential Qma
Assuming the 90 days horizon Franklin Small is expected to generate 1.15 times less return on investment than Prudential Qma. In addition to that, Franklin Small is 1.23 times more volatile than Prudential Qma Strategic. It trades about 0.21 of its total potential returns per unit of risk. Prudential Qma Strategic is currently generating about 0.3 per unit of volatility. If you would invest 1,176 in Prudential Qma Strategic on October 23, 2024 and sell it today you would earn a total of 48.00 from holding Prudential Qma Strategic or generate 4.08% 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. Prudential Qma Strategic
Performance |
| Timeline |
| Franklin Small Cap |
| Prudential Qma Strategic |
Franklin Small and Prudential Qma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Prudential Qma
The main advantage of trading using opposite Franklin Small and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Prudential Qma 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 Prudential Qma will offset losses from the drop in Prudential Qma's long position.| Franklin Small vs. Dunham Porategovernment Bond | Franklin Small vs. Schwab Government Money | Franklin Small vs. Virtus Seix Government | Franklin Small vs. Elfun Government Money |
| Prudential Qma vs. Needham Small Cap | Prudential Qma vs. Franklin Small Cap | Prudential Qma vs. Kinetics Small Cap | Prudential Qma vs. Lebenthal Lisanti 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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