Correlation Between Lumia and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Lumia 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 Lumia and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Franklin Small Cap, you can compare the effects of market volatilities on Lumia 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 Lumia with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Franklin Small.
Diversification Opportunities for Lumia and Franklin Small
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lumia and Franklin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lumia 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 Lumia 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 Lumia 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 Lumia i.e., Lumia and Franklin Small go up and down completely randomly.
Pair Corralation between Lumia and Franklin Small
Assuming the 90 days trading horizon Lumia is expected to generate 181.55 times more return on investment than Franklin Small. However, Lumia is 181.55 times more volatile than Franklin Small Cap. It trades about 0.2 of its potential returns per unit of risk. Franklin Small Cap is currently generating about -0.14 per unit of risk. If you would invest 0.00 in Lumia on October 11, 2024 and sell it today you would earn a total of 117.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lumia vs. Franklin Small Cap
Performance |
| Timeline |
| Lumia |
| Franklin Small Cap |
Lumia and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Franklin Small
The main advantage of trading using opposite Lumia and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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.The idea behind Lumia and Franklin Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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