Correlation Between Franklin Rising and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Franklin Rising and Franklin 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 Rising and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Rising Dividends and Franklin Small Cap, you can compare the effects of market volatilities on Franklin Rising and Franklin 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 Rising with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Rising and Franklin Small.
Diversification Opportunities for Franklin Rising and Franklin Small
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Rising Dividends and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap and Franklin Rising 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 Rising Dividends are associated (or correlated) with Franklin Small. 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 Cap has no effect on the direction of Franklin Rising i.e., Franklin Rising and Franklin Small go up and down completely randomly.
Pair Corralation between Franklin Rising and Franklin Small
Assuming the 90 days horizon Franklin Rising is expected to generate 1.9 times less return on investment than Franklin Small. But when comparing it to its historical volatility, Franklin Rising Dividends is 2.11 times less risky than Franklin Small. It trades about 0.12 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,968 in Franklin Small Cap on August 29, 2024 and sell it today you would earn a total of 544.00 from holding Franklin Small Cap or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Rising Dividends vs. Franklin Small Cap
Performance |
| Timeline |
| Franklin Rising Dividends |
| Franklin Small Cap |
Franklin Rising and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Rising and Franklin Small
The main advantage of trading using opposite Franklin Rising and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Rising position performs unexpectedly, Franklin 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 Franklin Small will offset losses from the drop in Franklin Small's long position.| Franklin Rising vs. Franklin Mutual Global | Franklin Rising vs. Franklin Growth Fund | Franklin Rising vs. Franklin Dynatech Fund | Franklin Rising vs. Franklin Strategic Income |
| Franklin Small vs. Franklin Rising Dividends | Franklin Small vs. Franklin Mutual Global | Franklin Small vs. Franklin Mutual Shares | Franklin Small vs. Franklin Growth Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |