Correlation Between Franklin Growth and Westwood Quality
Can any of the company-specific risk be diversified away by investing in both Franklin Growth and Westwood Quality 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 Westwood Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Growth Opportunities and Westwood Quality Smallcap, you can compare the effects of market volatilities on Franklin Growth and Westwood Quality 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 Westwood Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Westwood Quality.
Diversification Opportunities for Franklin Growth and Westwood Quality
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Westwood is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Westwood Quality Smallcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Quality Smallcap 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 Opportunities are associated (or correlated) with Westwood Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Quality Smallcap has no effect on the direction of Franklin Growth i.e., Franklin Growth and Westwood Quality go up and down completely randomly.
Pair Corralation between Franklin Growth and Westwood Quality
Assuming the 90 days horizon Franklin Growth is expected to generate 1.57 times less return on investment than Westwood Quality. But when comparing it to its historical volatility, Franklin Growth Opportunities is 1.16 times less risky than Westwood Quality. It trades about 0.07 of its potential returns per unit of risk. Westwood Quality Smallcap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,970 in Westwood Quality Smallcap on September 12, 2024 and sell it today you would earn a total of 328.00 from holding Westwood Quality Smallcap or generate 16.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Westwood Quality Smallcap
Performance |
| Timeline |
| Franklin Growth Oppo |
| Westwood Quality Smallcap |
Franklin Growth and Westwood Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Westwood Quality
The main advantage of trading using opposite Franklin Growth and Westwood Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth position performs unexpectedly, Westwood Quality 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 Westwood Quality will offset losses from the drop in Westwood Quality's long position.| Franklin Growth vs. American Funds The | Franklin Growth vs. American Funds The | Franklin Growth vs. Growth Fund Of | Franklin Growth vs. Growth Fund Of |
| Westwood Quality vs. Arrow Managed Futures | Westwood Quality vs. Guidepath Managed Futures | Westwood Quality vs. Simt Multi Asset Inflation | Westwood Quality vs. Ab Bond Inflation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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