Correlation Between Franklin Small and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Vanguard Small 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 Vanguard Small 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 Vanguard Small Cap Value, you can compare the effects of market volatilities on Franklin Small and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Vanguard Small.
Diversification Opportunities for Franklin Small and Vanguard Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Franklin and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Franklin Small i.e., Franklin Small and Vanguard Small go up and down completely randomly.
Pair Corralation between Franklin Small and Vanguard Small
Assuming the 90 days horizon Franklin Small Cap is expected to under-perform the Vanguard Small. In addition to that, Franklin Small is 1.09 times more volatile than Vanguard Small Cap Value. It trades about -0.01 of its total potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.01 per unit of volatility. If you would invest 5,063 in Vanguard Small Cap Value on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Vanguard Small Cap Value or generate 0.14% 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. Vanguard Small Cap Value
Performance |
| Timeline |
| Franklin Small Cap |
| Vanguard Small Cap |
Franklin Small and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Vanguard Small
The main advantage of trading using opposite Franklin Small and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Vanguard Small 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 Small will offset losses from the drop in Vanguard Small'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 |
| Vanguard Small vs. Goehring Rozencwajg Resources | Vanguard Small vs. Invesco Energy Fund | Vanguard Small vs. Fidelity Advisor Energy | Vanguard Small vs. Alpsalerian Energy Infrastructure |
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 Stocks Directory module to find actively traded stocks across global markets.
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