Correlation Between Small Company and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Small Company and Franklin Growth 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 Growth 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 Growth Opportunities, you can compare the effects of market volatilities on Small Company and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Franklin Growth.
Diversification Opportunities for Small Company and Franklin Growth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Small Company i.e., Small Company and Franklin Growth go up and down completely randomly.
Pair Corralation between Small Company and Franklin Growth
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.76 times more return on investment than Franklin Growth. However, Small Company is 1.76 times more volatile than Franklin Growth Opportunities. It trades about 0.39 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.1 per unit of risk. If you would invest 1,254 in Small Pany Growth on August 24, 2024 and sell it today you would earn a total of 245.00 from holding Small Pany Growth or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Small Pany Growth |
| Franklin Growth Oppo |
Small Company and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Franklin Growth
The main advantage of trading using opposite Small Company and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth'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 Growth vs. Europacific Growth Fund | Franklin Growth vs. Washington Mutual Investors | Franklin Growth vs. ABIVAX Socit Anonyme | Franklin Growth vs. SCOR PK |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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