Correlation Between Franklin Growth and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Franklin Growth 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 Growth 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 Growth Fund and Franklin Small Cap, you can compare the effects of market volatilities on Franklin Growth 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 Growth with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Franklin Small.
Diversification Opportunities for Franklin Growth and Franklin Small
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth 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 Growth 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 Growth 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 Growth i.e., Franklin Growth and Franklin Small go up and down completely randomly.
Pair Corralation between Franklin Growth and Franklin Small
Assuming the 90 days horizon Franklin Growth is expected to generate 1.62 times less return on investment than Franklin Small. But when comparing it to its historical volatility, Franklin Growth Fund is 1.36 times less risky than Franklin Small. It trades about 0.07 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,358 in Franklin Small Cap on August 25, 2024 and sell it today you would earn a total of 1,108 from holding Franklin Small Cap or generate 20.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Fund vs. Franklin Small Cap
Performance |
| Timeline |
| Franklin Growth |
| Franklin Small Cap |
Franklin Growth and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Franklin Small
The main advantage of trading using opposite Franklin Growth and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth 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 Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |