Correlation Between Franklin Small-mid and International Equity
Can any of the company-specific risk be diversified away by investing in both Franklin Small-mid and International Equity 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 Small-mid and International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Mid Cap and International Equity Series, you can compare the effects of market volatilities on Franklin Small-mid and International Equity 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 Small-mid with a short position of International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small-mid and International Equity.
Diversification Opportunities for Franklin Small-mid and International Equity
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and International is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Mid Cap and International Equity Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Franklin Small-mid 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 Small Mid Cap are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Franklin Small-mid i.e., Franklin Small-mid and International Equity go up and down completely randomly.
Pair Corralation between Franklin Small-mid and International Equity
Assuming the 90 days horizon Franklin Small Mid Cap is expected to generate 1.32 times more return on investment than International Equity. However, Franklin Small-mid is 1.32 times more volatile than International Equity Series. It trades about 0.36 of its potential returns per unit of risk. International Equity Series is currently generating about -0.14 per unit of risk. If you would invest 4,570 in Franklin Small Mid Cap on August 29, 2024 and sell it today you would earn a total of 398.00 from holding Franklin Small Mid Cap or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Mid Cap vs. International Equity Series
Performance |
| Timeline |
| Franklin Small Mid |
| International Equity |
Franklin Small-mid and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small-mid and International Equity
The main advantage of trading using opposite Franklin Small-mid and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small-mid position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Franklin Small-mid vs. Scharf Global Opportunity | Franklin Small-mid vs. Vanguard Global Credit | Franklin Small-mid vs. Morgan Stanley Global | Franklin Small-mid vs. Kinetics Global Fund |
| International Equity vs. Franklin Mutual Beacon | International Equity vs. Templeton Developing Markets | International Equity vs. Franklin Mutual Global | International Equity vs. Franklin Mutual Global |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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