Correlation Between Qs Defensive and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Qs Defensive 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 Qs Defensive and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Defensive Growth and Franklin Small Cap, you can compare the effects of market volatilities on Qs Defensive 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 Qs Defensive with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Defensive and Franklin Small.
Diversification Opportunities for Qs Defensive and Franklin Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LMLRX and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Qs Defensive Growth 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 Qs Defensive 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 Qs Defensive Growth 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 Qs Defensive i.e., Qs Defensive and Franklin Small go up and down completely randomly.
Pair Corralation between Qs Defensive and Franklin Small
Assuming the 90 days horizon Qs Defensive is expected to generate 2.13 times less return on investment than Franklin Small. But when comparing it to its historical volatility, Qs Defensive Growth is 2.98 times less risky than Franklin Small. It trades about 0.09 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,417 in Franklin Small Cap on November 3, 2024 and sell it today you would earn a total of 263.00 from holding Franklin Small Cap or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Defensive Growth vs. Franklin Small Cap
Performance |
| Timeline |
| Qs Defensive Growth |
| Franklin Small Cap |
Qs Defensive and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Defensive and Franklin Small
The main advantage of trading using opposite Qs Defensive and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Defensive 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.| Qs Defensive vs. Aqr Risk Parity | Qs Defensive vs. Transamerica High Yield | Qs Defensive vs. Gugg Actv Invmt | Qs Defensive vs. Pace High Yield |
| Franklin Small vs. Fidelity Advisor Technology | Franklin Small vs. Vanguard Information Technology | Franklin Small vs. Red Oak Technology | Franklin Small vs. Columbia Global Technology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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