Correlation Between Small Company and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Small Company and Franklin Templeton 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 Small Company and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Franklin Templeton Smacs, you can compare the effects of market volatilities on Small Company and Franklin Templeton 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 Small Company with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Franklin Templeton.
Diversification Opportunities for Small Company and Franklin Templeton
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Franklin is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Franklin Templeton Smacs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton Smacs and Small Company 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 Small Pany Growth are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton Smacs has no effect on the direction of Small Company i.e., Small Company and Franklin Templeton go up and down completely randomly.
Pair Corralation between Small Company and Franklin Templeton
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.88 times more return on investment than Franklin Templeton. However, Small Company is 1.88 times more volatile than Franklin Templeton Smacs. It trades about 0.66 of its potential returns per unit of risk. Franklin Templeton Smacs is currently generating about -0.15 per unit of risk. If you would invest 1,285 in Small Pany Growth on September 3, 2024 and sell it today you would earn a total of 384.00 from holding Small Pany Growth or generate 29.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Franklin Templeton Smacs
Performance |
| Timeline |
| Small Pany Growth |
| Franklin Templeton Smacs |
Small Company and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Franklin Templeton
The main advantage of trading using opposite Small Company and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Franklin Templeton vs. Nationwide Global Equity | Franklin Templeton vs. Old Westbury Large | Franklin Templeton vs. Artisan Thematic Fund | Franklin Templeton vs. Semiconductor Ultrasector Profund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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