Correlation Between Franklin Microcap and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Franklin Microcap 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 Microcap 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 Microcap Value and Smallcap World Fund, you can compare the effects of market volatilities on Franklin Microcap 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 Microcap with a short position of Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Microcap and Smallcap World.
Diversification Opportunities for Franklin Microcap and Smallcap World
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Smallcap is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Microcap Value 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 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 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 Microcap i.e., Franklin Microcap and Smallcap World go up and down completely randomly.
Pair Corralation between Franklin Microcap and Smallcap World
Assuming the 90 days horizon Franklin Microcap Value is expected to generate 1.09 times more return on investment than Smallcap World. However, Franklin Microcap is 1.09 times more volatile than Smallcap World Fund. It trades about 0.27 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.16 per unit of risk. If you would invest 2,435 in Franklin Microcap Value on October 24, 2024 and sell it today you would earn a total of 121.00 from holding Franklin Microcap Value or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Franklin Microcap Value vs. Smallcap World Fund
Performance |
| Timeline |
| Franklin Microcap Value |
| Smallcap World |
Franklin Microcap and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Microcap and Smallcap World
The main advantage of trading using opposite Franklin Microcap and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Microcap 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 Microcap vs. Rbc Global Equity | Franklin Microcap vs. Rbb Fund | Franklin Microcap vs. Rbc Funds Trust | Franklin Microcap vs. Legg Mason Global |
| Smallcap World vs. Qs Small Capitalization | Smallcap World vs. T Rowe Price | Smallcap World vs. Franklin Small Cap | Smallcap World vs. Needham Aggressive Growth |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |