Correlation Between Franklin Low and Jacob Small
Can any of the company-specific risk be diversified away by investing in both Franklin Low and Jacob 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 Low and Jacob Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Low Duration and Jacob Small Cap, you can compare the effects of market volatilities on Franklin Low and Jacob 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 Low with a short position of Jacob Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Low and Jacob Small.
Diversification Opportunities for Franklin Low and Jacob Small
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Jacob is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Low Duration and Jacob Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Small Cap and Franklin Low 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 Low Duration are associated (or correlated) with Jacob Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Small Cap has no effect on the direction of Franklin Low i.e., Franklin Low and Jacob Small go up and down completely randomly.
Pair Corralation between Franklin Low and Jacob Small
Assuming the 90 days horizon Franklin Low is expected to generate 3.28 times less return on investment than Jacob Small. But when comparing it to its historical volatility, Franklin Low Duration is 15.66 times less risky than Jacob Small. It trades about 0.21 of its potential returns per unit of risk. Jacob Small Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,136 in Jacob Small Cap on October 20, 2024 and sell it today you would earn a total of 26.00 from holding Jacob Small Cap or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Low Duration vs. Jacob Small Cap
Performance |
| Timeline |
| Franklin Low Duration |
| Jacob Small Cap |
Franklin Low and Jacob Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Low and Jacob Small
The main advantage of trading using opposite Franklin Low and Jacob Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Low position performs unexpectedly, Jacob 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 Jacob Small will offset losses from the drop in Jacob Small's long position.| Franklin Low vs. Allianzgi Diversified Income | Franklin Low vs. Putnam Diversified Income | Franklin Low vs. Wells Fargo Diversified | Franklin Low vs. Voya Solution Conservative |
| Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Oberweis Small Cap Opportunities | Jacob Small vs. Needham Small Cap |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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