Correlation Between Icon Natural and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Icon 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 Icon 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 Icon Natural Resources and Franklin Small Cap, you can compare the effects of market volatilities on Icon 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 Icon Natural with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Franklin Small.
Diversification Opportunities for Icon Natural and Franklin Small
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Icon and Franklin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap and Icon 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 Icon 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 Cap has no effect on the direction of Icon Natural i.e., Icon Natural and Franklin Small go up and down completely randomly.
Pair Corralation between Icon Natural and Franklin Small
Assuming the 90 days horizon Icon 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, Icon Natural Resources is 1.27 times less risky than Franklin Small. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Franklin Small Cap is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,665 in Franklin Small Cap on October 11, 2024 and sell it today you would lose (58.00) from holding Franklin Small Cap or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. Franklin Small Cap
Performance |
| Timeline |
| Icon Natural Resources |
| Franklin Small Cap |
Icon Natural and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Franklin Small
The main advantage of trading using opposite Icon Natural and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon 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.| Icon Natural vs. Icon Financial Fund | Icon Natural vs. Dreyfus Natural Resources | Icon Natural vs. Icon Natural Resources | Icon Natural vs. Icon Information Technology |
| Franklin Small vs. T Rowe Price | Franklin Small vs. Ab Equity Income | Franklin Small vs. T Rowe Price | Franklin Small vs. Enhanced Fixed Income |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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