Correlation Between Franklin Natural and Westwood Smallcap
Can any of the company-specific risk be diversified away by investing in both Franklin Natural and Westwood Smallcap 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 Westwood Smallcap 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 Westwood Smallcap Growth, you can compare the effects of market volatilities on Franklin Natural and Westwood Smallcap 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 Westwood Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Natural and Westwood Smallcap.
Diversification Opportunities for Franklin Natural and Westwood Smallcap
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Westwood is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Natural Resources and Westwood Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Smallcap Growth 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 Westwood Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Smallcap Growth has no effect on the direction of Franklin Natural i.e., Franklin Natural and Westwood Smallcap go up and down completely randomly.
Pair Corralation between Franklin Natural and Westwood Smallcap
If you would invest 2,938 in Franklin Natural Resources on September 12, 2024 and sell it today you would earn a total of 115.00 from holding Franklin Natural Resources or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
Franklin Natural Resources vs. Westwood Smallcap Growth
Performance |
| Timeline |
| Franklin Natural Res |
| Westwood Smallcap Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin Natural and Westwood Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Natural and Westwood Smallcap
The main advantage of trading using opposite Franklin Natural and Westwood Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Natural position performs unexpectedly, Westwood Smallcap 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 Westwood Smallcap will offset losses from the drop in Westwood Smallcap's long position.| Franklin Natural vs. Vanguard Financials Index | Franklin Natural vs. Prudential Jennison Financial | Franklin Natural vs. John Hancock Financial | Franklin Natural vs. Mesirow Financial Small |
| Westwood Smallcap vs. Blackrock High Yield | Westwood Smallcap vs. Janus High Yield Fund | Westwood Smallcap vs. Pace High Yield | Westwood Smallcap vs. T Rowe Price |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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