Correlation Between Franklin Balance and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Franklin Balance and Vanguard Mid-cap 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 Vanguard Mid-cap 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 Vanguard Mid Cap Value, you can compare the effects of market volatilities on Franklin Balance and Vanguard Mid-cap 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 Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Balance and Vanguard Mid-cap.
Diversification Opportunities for Franklin Balance and Vanguard Mid-cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Vanguard is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Balance Sheet and Vanguard Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Franklin Balance i.e., Franklin Balance and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Franklin Balance and Vanguard Mid-cap
Assuming the 90 days horizon Franklin Balance Sheet is expected to under-perform the Vanguard Mid-cap. In addition to that, Franklin Balance is 1.1 times more volatile than Vanguard Mid Cap Value. It trades about -0.1 of its total potential returns per unit of risk. Vanguard Mid Cap Value is currently generating about -0.11 per unit of volatility. If you would invest 8,669 in Vanguard Mid Cap Value on November 27, 2024 and sell it today you would lose (114.00) from holding Vanguard Mid Cap Value or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Balance Sheet vs. Vanguard Mid Cap Value
Performance |
| Timeline |
| Franklin Balance Sheet |
| Vanguard Mid Cap |
Franklin Balance and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Balance and Vanguard Mid-cap
The main advantage of trading using opposite Franklin Balance and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Balance position performs unexpectedly, Vanguard Mid-cap 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 Vanguard Mid-cap will offset losses from the drop in Vanguard Mid-cap'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 |
| Vanguard Mid-cap vs. Vanguard Small Cap Value | Vanguard Mid-cap vs. Vanguard Mid Cap Growth | Vanguard Mid-cap vs. Vanguard Value Index | Vanguard Mid-cap vs. Vanguard Small Cap Growth |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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