Correlation Between Franklin Microcap and Perritt Ultra
Can any of the company-specific risk be diversified away by investing in both Franklin Microcap and Perritt Ultra 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 Perritt Ultra 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 Perritt Ultra Microcap, you can compare the effects of market volatilities on Franklin Microcap and Perritt Ultra 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 Perritt Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Microcap and Perritt Ultra.
Diversification Opportunities for Franklin Microcap and Perritt Ultra
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and PERRITT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FRANKLIN MICROCAP VALUE and Perritt Ultra Microcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perritt Ultra Microcap 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 Perritt Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perritt Ultra Microcap has no effect on the direction of Franklin Microcap i.e., Franklin Microcap and Perritt Ultra go up and down completely randomly.
Pair Corralation between Franklin Microcap and Perritt Ultra
Assuming the 90 days horizon FRANKLIN MICROCAP VALUE is expected to generate 1.15 times more return on investment than Perritt Ultra. However, Franklin Microcap is 1.15 times more volatile than Perritt Ultra Microcap. It trades about 0.11 of its potential returns per unit of risk. Perritt Ultra Microcap is currently generating about -0.01 per unit of risk. If you would invest 2,789 in FRANKLIN MICROCAP VALUE on September 1, 2024 and sell it today you would earn a total of 537.00 from holding FRANKLIN MICROCAP VALUE or generate 19.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.1% |
| Values | Daily Returns |
FRANKLIN MICROCAP VALUE vs. Perritt Ultra Microcap
Performance |
| Timeline |
| Franklin Microcap Value |
| Perritt Ultra Microcap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Franklin Microcap and Perritt Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Microcap and Perritt Ultra
The main advantage of trading using opposite Franklin Microcap and Perritt Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Microcap position performs unexpectedly, Perritt Ultra 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 Perritt Ultra will offset losses from the drop in Perritt Ultra's long position.| Franklin Microcap vs. Ab Select Longshort | Franklin Microcap vs. Maryland Short Term Tax Free | Franklin Microcap vs. Old Westbury Short Term | Franklin Microcap vs. Franklin Federal Limited Term |
| Perritt Ultra vs. Perritt Microcap Opportunities | Perritt Ultra vs. Paradigm Value Fund | Perritt Ultra vs. Champlain Small Pany | Perritt Ultra vs. Oberweis Micro Cap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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