Correlation Between Thrivent High and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Thrivent High 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 Thrivent High and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent High Yield and Franklin Small Cap, you can compare the effects of market volatilities on Thrivent High 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 Thrivent High with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Franklin Small.
Diversification Opportunities for Thrivent High and Franklin Small
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thrivent and Franklin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield 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 Thrivent High 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 Thrivent High Yield 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 Thrivent High i.e., Thrivent High and Franklin Small go up and down completely randomly.
Pair Corralation between Thrivent High and Franklin Small
Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.16 times more return on investment than Franklin Small. However, Thrivent High Yield is 6.09 times less risky than Franklin Small. It trades about 0.08 of its potential returns per unit of risk. Franklin Small Cap is currently generating about -0.13 per unit of risk. If you would invest 426.00 in Thrivent High Yield on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Thrivent High Yield or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thrivent High Yield vs. Franklin Small Cap
Performance |
| Timeline |
| Thrivent High Yield |
| Franklin Small Cap |
Thrivent High and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and Franklin Small
The main advantage of trading using opposite Thrivent High and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High 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.| Thrivent High vs. Thrivent Limited Maturity | Thrivent High vs. Thrivent Income Fund | Thrivent High vs. Thrivent Large Cap | Thrivent High vs. Thrivent Large Cap |
| Franklin Small vs. Vanguard Small Cap Value | Franklin Small vs. SCOR PK | Franklin Small vs. Morningstar Unconstrained Allocation | Franklin Small vs. Thrivent High Yield |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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