Correlation Between Franklin Small-mid and Vanguard Explorer
Can any of the company-specific risk be diversified away by investing in both Franklin Small-mid and Vanguard Explorer 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 Vanguard Explorer 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 Vanguard Explorer Fund, you can compare the effects of market volatilities on Franklin Small-mid and Vanguard Explorer 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 Vanguard Explorer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small-mid and Vanguard Explorer.
Diversification Opportunities for Franklin Small-mid and Vanguard Explorer
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Vanguard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Mid Cap and Vanguard Explorer Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Explorer 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 Vanguard Explorer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Explorer has no effect on the direction of Franklin Small-mid i.e., Franklin Small-mid and Vanguard Explorer go up and down completely randomly.
Pair Corralation between Franklin Small-mid and Vanguard Explorer
Assuming the 90 days horizon Franklin Small Mid Cap is expected to generate 0.52 times more return on investment than Vanguard Explorer. However, Franklin Small Mid Cap is 1.92 times less risky than Vanguard Explorer. It trades about 0.13 of its potential returns per unit of risk. Vanguard Explorer Fund is currently generating about -0.1 per unit of risk. If you would invest 4,736 in Franklin Small Mid Cap on October 23, 2024 and sell it today you would earn a total of 101.00 from holding Franklin Small Mid Cap or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Mid Cap vs. Vanguard Explorer Fund
Performance |
| Timeline |
| Franklin Small Mid |
| Vanguard Explorer |
Franklin Small-mid and Vanguard Explorer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small-mid and Vanguard Explorer
The main advantage of trading using opposite Franklin Small-mid and Vanguard Explorer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small-mid position performs unexpectedly, Vanguard Explorer 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 Vanguard Explorer will offset losses from the drop in Vanguard Explorer's long position.| Franklin Small-mid vs. Leader Short Term Bond | Franklin Small-mid vs. Bts Tactical Fixed | Franklin Small-mid vs. Georgia Tax Free Bond | Franklin Small-mid vs. Barings High Yield |
| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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