Correlation Between Franklin Small and Rationalpier
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Rationalpier 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 Rationalpier 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 Rationalpier 88 Convertible, you can compare the effects of market volatilities on Franklin Small and Rationalpier 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 Rationalpier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Rationalpier.
Diversification Opportunities for Franklin Small and Rationalpier
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Rationalpier is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv 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 Rationalpier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Franklin Small i.e., Franklin Small and Rationalpier go up and down completely randomly.
Pair Corralation between Franklin Small and Rationalpier
Assuming the 90 days horizon Franklin Small Cap is expected to generate 3.31 times more return on investment than Rationalpier. However, Franklin Small is 3.31 times more volatile than Rationalpier 88 Convertible. It trades about 0.11 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.16 per unit of risk. If you would invest 5,732 in Franklin Small Cap on September 12, 2024 and sell it today you would earn a total of 1,097 from holding Franklin Small Cap or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Rationalpier 88 Convertible
Performance |
| Timeline |
| Franklin Small Cap |
| Rationalpier 88 Conv |
Franklin Small and Rationalpier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Rationalpier
The main advantage of trading using opposite Franklin Small and Rationalpier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Rationalpier 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 Rationalpier will offset losses from the drop in Rationalpier's long position.| Franklin Small vs. Vanguard Small Cap Value | Franklin Small vs. SCOR PK | Franklin Small vs. Morningstar Unconstrained Allocation | Franklin Small vs. Thrivent High Yield |
| Rationalpier vs. Gabelli Gold Fund | Rationalpier vs. James Balanced Golden | Rationalpier vs. Precious Metals And | Rationalpier vs. Franklin Gold Precious |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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