Correlation Between Franklin Natural and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Franklin Natural 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 Natural 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 Natural Resources and Franklin Small Mid Cap, you can compare the effects of market volatilities on Franklin Natural 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 Natural with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Franklin Small.
Diversification Opportunities for Franklin Natural and Franklin Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid and Franklin Natural 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 Natural Resources 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 Mid has no effect on the direction of Franklin Natural i.e., Franklin Natural and Franklin Small go up and down completely randomly.
Pair Corralation between Franklin Natural and Franklin Small
Assuming the 90 days horizon Franklin Natural Resources is expected to under-perform the Franklin Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Natural Resources is 1.11 times less risky than Franklin Small. The mutual fund trades about -0.48 of its potential returns per unit of risk. The Franklin Small Mid Cap is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Franklin Small Mid Cap on September 27, 2024 and sell it today you would lose (192.00) from holding Franklin Small Mid Cap or give up 3.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Natural Resources vs. Franklin Small Mid Cap
Performance |
| Timeline |
| Franklin Natural Res |
| Franklin Small Mid |
Franklin Natural and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Franklin Small
The main advantage of trading using opposite Franklin Natural and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural 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 Natural vs. Sarofim Equity | Franklin Natural vs. The E Fixed | Franklin Natural vs. Us Strategic Equity | Franklin Natural vs. Qs Global Equity |
| Franklin Small vs. Franklin Natural Resources | Franklin Small vs. Tortoise Energy Independence | Franklin Small vs. Calvert Global Energy | Franklin Small vs. Jennison Natural Resources |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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