Correlation Between Franklin Dynatech and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Franklin Dynatech and Franklin Small 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 Dynatech and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Dynatech Fund and Franklin Small Cap, you can compare the effects of market volatilities on Franklin Dynatech and Franklin Small 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 Dynatech with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and Franklin Small.
Diversification Opportunities for Franklin Dynatech and Franklin Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap and Franklin Dynatech 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 Dynatech Fund are associated (or correlated) with Franklin Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Cap has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Franklin Small go up and down completely randomly.
Pair Corralation between Franklin Dynatech and Franklin Small
Assuming the 90 days horizon Franklin Dynatech is expected to generate 1.21 times less return on investment than Franklin Small. In addition to that, Franklin Dynatech is 1.11 times more volatile than Franklin Small Cap. It trades about 0.06 of its total potential returns per unit of risk. Franklin Small Cap is currently generating about 0.09 per unit of volatility. If you would invest 5,766 in Franklin Small Cap on August 27, 2024 and sell it today you would earn a total of 1,180 from holding Franklin Small Cap or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Dynatech Fund vs. Franklin Small Cap
Performance |
| Timeline |
| Franklin Dynatech |
| Franklin Small Cap |
Franklin Dynatech and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Dynatech and Franklin Small
The main advantage of trading using opposite Franklin Dynatech and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Dynatech position performs unexpectedly, Franklin Small 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 Small will offset losses from the drop in Franklin Small's long position.| Franklin Dynatech vs. Franklin Mutual Beacon | Franklin Dynatech vs. Templeton Developing Markets | Franklin Dynatech vs. Franklin Mutual Global | Franklin Dynatech vs. Franklin Mutual Global |
| Franklin Small vs. Franklin Rising Dividends | Franklin Small vs. Franklin Mutual Global | Franklin Small vs. Franklin Mutual Shares | Franklin Small vs. Franklin Growth Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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