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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and International is 0.09. 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 0.78 times more return on investment than International Equity. However, Franklin Small Mid Cap is 1.29 times less risky than International Equity. It trades about 0.17 of its potential returns per unit of risk. International Equity Series is currently generating about -0.03 per unit of risk. If you would invest 4,000 in Franklin Small Mid Cap on November 3, 2024 and sell it today you would earn a total of 930.00 from holding Franklin Small Mid Cap or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| 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. Hewitt Money Market | Franklin Small-mid vs. Gabelli Global Financial | Franklin Small-mid vs. Blackstone Secured Lending | Franklin Small-mid vs. Franklin Government Money |
| International Equity vs. Franklin Small Mid Cap | International Equity vs. Blackrock Glbl Sm | International Equity vs. Blackrock Fundamental Growth | International Equity vs. Blackrock Gbl Alloc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |