Correlation Between Franklin Real and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Smallcap World 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 Real and Smallcap World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Real Estate and Smallcap World Fund, you can compare the effects of market volatilities on Franklin Real and Smallcap World 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 Real with a short position of Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Smallcap World.
Diversification Opportunities for Franklin Real and Smallcap World
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Smallcap is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Franklin Real 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 Real Estate are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Franklin Real i.e., Franklin Real and Smallcap World go up and down completely randomly.
Pair Corralation between Franklin Real and Smallcap World
Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.12 times more return on investment than Smallcap World. However, Franklin Real is 1.12 times more volatile than Smallcap World Fund. It trades about 0.12 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.12 per unit of risk. If you would invest 1,946 in Franklin Real Estate on August 30, 2024 and sell it today you would earn a total of 52.00 from holding Franklin Real Estate or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Smallcap World Fund
Performance |
| Timeline |
| Franklin Real Estate |
| Smallcap World |
Franklin Real and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Smallcap World
The main advantage of trading using opposite Franklin Real and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| Smallcap World vs. Franklin Natural Resources | Smallcap World vs. Dreyfus Natural Resources | Smallcap World vs. Fidelity Advisor Energy | Smallcap World vs. Hennessy Bp Energy |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |