Correlation Between Franklin Microcap and Ab Select
Can any of the company-specific risk be diversified away by investing in both Franklin Microcap and Ab Select 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 Microcap and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FRANKLIN MICROCAP VALUE and Ab Select Longshort, you can compare the effects of market volatilities on Franklin Microcap and Ab Select 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 Microcap with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Microcap and Ab Select.
Diversification Opportunities for Franklin Microcap and Ab Select
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and ASCLX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FRANKLIN MICROCAP VALUE and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Franklin Microcap 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 MICROCAP VALUE are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Franklin Microcap i.e., Franklin Microcap and Ab Select go up and down completely randomly.
Pair Corralation between Franklin Microcap and Ab Select
Assuming the 90 days horizon FRANKLIN MICROCAP VALUE is expected to generate 2.97 times more return on investment than Ab Select. However, Franklin Microcap is 2.97 times more volatile than Ab Select Longshort. It trades about 0.29 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.33 per unit of risk. If you would invest 3,017 in FRANKLIN MICROCAP VALUE on September 2, 2024 and sell it today you would earn a total of 309.00 from holding FRANKLIN MICROCAP VALUE or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FRANKLIN MICROCAP VALUE vs. Ab Select Longshort
Performance |
| Timeline |
| Franklin Microcap Value |
| Ab Select Longshort |
Franklin Microcap and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Microcap and Ab Select
The main advantage of trading using opposite Franklin Microcap and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Microcap position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Franklin Microcap vs. Franklin Rising Dividends | Franklin Microcap vs. Franklin Mutual Global | Franklin Microcap vs. Franklin Growth Fund | Franklin Microcap vs. Franklin Strategic Income |
| Ab Select vs. The Gabelli Equity | Ab Select vs. Ultra Short Fixed Income | Ab Select vs. Rbc Global Equity | Ab Select vs. Sarofim Equity |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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