Correlation Between Franklin Balance and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both Franklin Balance and Franklin Small-mid 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 Balance and Franklin Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Balance Sheet and Franklin Small Mid Cap, you can compare the effects of market volatilities on Franklin Balance and Franklin Small-mid 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 Balance with a short position of Franklin Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Balance and Franklin Small-mid.
Diversification Opportunities for Franklin Balance and Franklin Small-mid
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Balance Sheet and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid and Franklin Balance 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 Balance Sheet are associated (or correlated) with Franklin Small-mid. 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 Mid has no effect on the direction of Franklin Balance i.e., Franklin Balance and Franklin Small-mid go up and down completely randomly.
Pair Corralation between Franklin Balance and Franklin Small-mid
Assuming the 90 days horizon Franklin Balance Sheet is expected to generate 0.68 times more return on investment than Franklin Small-mid. However, Franklin Balance Sheet is 1.47 times less risky than Franklin Small-mid. It trades about -0.1 of its potential returns per unit of risk. Franklin Small Mid Cap is currently generating about -0.21 per unit of risk. If you would invest 3,623 in Franklin Balance Sheet on November 27, 2024 and sell it today you would lose (50.00) from holding Franklin Balance Sheet or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Balance Sheet vs. Franklin Small Mid Cap
Performance |
| Timeline |
| Franklin Balance Sheet |
| Franklin Small Mid |
Franklin Balance and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Balance and Franklin Small-mid
The main advantage of trading using opposite Franklin Balance and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Balance position performs unexpectedly, Franklin Small-mid 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-mid will offset losses from the drop in Franklin Small-mid's long position.| Franklin Balance vs. Calvert Large Cap | Franklin Balance vs. Guidemark Large Cap | Franklin Balance vs. Dodge Cox Stock | Franklin Balance vs. M Large Cap |
| Franklin Small-mid vs. Templeton Foreign Fund | Franklin Small-mid vs. Franklin Growth Fund | Franklin Small-mid vs. Franklin Balance Sheet | Franklin Small-mid vs. Templeton Developing Markets |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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