Correlation Between Franklin Small-mid and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Franklin Small-mid and Lgm Risk 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-mid and Lgm Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Mid Cap and Lgm Risk Managed, you can compare the effects of market volatilities on Franklin Small-mid and Lgm Risk 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-mid with a short position of Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small-mid and Lgm Risk.
Diversification Opportunities for Franklin Small-mid and Lgm Risk
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Lgm is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Mid Cap and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed and Franklin Small-mid 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 Mid Cap are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Franklin Small-mid i.e., Franklin Small-mid and Lgm Risk go up and down completely randomly.
Pair Corralation between Franklin Small-mid and Lgm Risk
Assuming the 90 days horizon Franklin Small Mid Cap is expected to generate 3.63 times more return on investment than Lgm Risk. However, Franklin Small-mid is 3.63 times more volatile than Lgm Risk Managed. It trades about 0.42 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.37 per unit of risk. If you would invest 4,683 in Franklin Small Mid Cap on September 3, 2024 and sell it today you would earn a total of 440.00 from holding Franklin Small Mid Cap or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Mid Cap vs. Lgm Risk Managed
Performance |
| Timeline |
| Franklin Small Mid |
| Lgm Risk Managed |
Franklin Small-mid and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small-mid and Lgm Risk
The main advantage of trading using opposite Franklin Small-mid and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small-mid position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Franklin Small-mid vs. Dodge Cox Stock | Franklin Small-mid vs. Tax Managed Large Cap | Franklin Small-mid vs. Pace Large Value | Franklin Small-mid vs. Qs Large Cap |
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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 Stocks Directory module to find actively traded stocks across global markets.
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