Correlation Between Mesirow Financial and Franklin International
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Franklin International 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 Mesirow Financial and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Franklin International Growth, you can compare the effects of market volatilities on Mesirow Financial and Franklin International 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 Mesirow Financial with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Franklin International.
Diversification Opportunities for Mesirow Financial and Franklin International
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mesirow and Franklin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Franklin International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Mesirow Financial 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 Mesirow Financial Small are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Franklin International go up and down completely randomly.
Pair Corralation between Mesirow Financial and Franklin International
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 1.06 times more return on investment than Franklin International. However, Mesirow Financial is 1.06 times more volatile than Franklin International Growth. It trades about 0.05 of its potential returns per unit of risk. Franklin International Growth is currently generating about 0.03 per unit of risk. If you would invest 1,152 in Mesirow Financial Small on September 3, 2024 and sell it today you would earn a total of 292.00 from holding Mesirow Financial Small or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Franklin International Growth
Performance |
| Timeline |
| Mesirow Financial Small |
| Franklin International |
Mesirow Financial and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Franklin International
The main advantage of trading using opposite Mesirow Financial and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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