Correlation Between Franklin Small and Franklin International
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Franklin International 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 and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Cap and Franklin International Growth, you can compare the effects of market volatilities on Franklin Small and Franklin International 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 with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Franklin International.
Diversification Opportunities for Franklin Small and Franklin International
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Franklin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Franklin Small 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 Cap are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Franklin Small i.e., Franklin Small and Franklin International go up and down completely randomly.
Pair Corralation between Franklin Small and Franklin International
Assuming the 90 days horizon Franklin Small Cap is expected to under-perform the Franklin International. In addition to that, Franklin Small is 1.08 times more volatile than Franklin International Growth. It trades about -0.01 of its total potential returns per unit of risk. Franklin International Growth is currently generating about 0.0 per unit of volatility. If you would invest 1,763 in Franklin International Growth on September 13, 2024 and sell it today you would lose (2.00) from holding Franklin International Growth or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Small Cap vs. Franklin International Growth
Performance |
| Timeline |
| Franklin Small Cap |
| Franklin International |
Franklin Small and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Franklin International
The main advantage of trading using opposite Franklin Small and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Franklin Small vs. Franklin Mutual Beacon | Franklin Small vs. Templeton Developing Markets | Franklin Small vs. Franklin Mutual Global | Franklin Small vs. Franklin Mutual Global |
| Franklin International vs. Franklin Dynatech Fund | Franklin International vs. Franklin Growth Fund | Franklin International vs. Franklin Rising Dividends | Franklin International vs. Franklin Small Cap |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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