Correlation Between Franklin Moderate and Chartwell Small
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Chartwell 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 Moderate and Chartwell Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Chartwell Small Cap, you can compare the effects of market volatilities on Franklin Moderate and Chartwell 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 Moderate with a short position of Chartwell Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Chartwell Small.
Diversification Opportunities for Franklin Moderate and Chartwell Small
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Chartwell is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Chartwell Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Small Cap and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Chartwell Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Small Cap has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Chartwell Small go up and down completely randomly.
Pair Corralation between Franklin Moderate and Chartwell Small
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.26 times less return on investment than Chartwell Small. But when comparing it to its historical volatility, Franklin Moderate Allocation is 2.28 times less risky than Chartwell Small. It trades about 0.17 of its potential returns per unit of risk. Chartwell Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,242 in Chartwell Small Cap on September 13, 2024 and sell it today you would earn a total of 34.00 from holding Chartwell Small Cap or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Chartwell Small Cap
Performance |
| Timeline |
| Franklin Moderate |
| Chartwell Small Cap |
Franklin Moderate and Chartwell Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Chartwell Small
The main advantage of trading using opposite Franklin Moderate and Chartwell Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Chartwell 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 Chartwell Small will offset losses from the drop in Chartwell Small's long position.| Franklin Moderate vs. Nasdaq 100 2x Strategy | Franklin Moderate vs. Black Oak Emerging | Franklin Moderate vs. Mid Cap 15x Strategy | Franklin Moderate vs. Artisan Emerging Markets |
| Chartwell Small vs. Multisector Bond Sma | Chartwell Small vs. Touchstone Premium Yield | Chartwell Small vs. Ab Global Bond | Chartwell Small vs. Alliancebernstein Bond |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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