Correlation Between Nuveen High and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Nuveen High 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 Nuveen High and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen High Yield and Franklin Small Cap, you can compare the effects of market volatilities on Nuveen High 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 Nuveen High with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and Franklin Small.
Diversification Opportunities for Nuveen High and Franklin Small
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nuveen and Franklin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Yield 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 Nuveen High 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 Nuveen High Yield 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 Nuveen High i.e., Nuveen High and Franklin Small go up and down completely randomly.
Pair Corralation between Nuveen High and Franklin Small
Assuming the 90 days horizon Nuveen High Yield is expected to under-perform the Franklin Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen High Yield is 3.13 times less risky than Franklin Small. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Franklin Small Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,584 in Franklin Small Cap on November 3, 2024 and sell it today you would earn a total of 96.00 from holding Franklin Small Cap or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen High Yield vs. Franklin Small Cap
Performance |
| Timeline |
| Nuveen High Yield |
| Franklin Small Cap |
Nuveen High and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and Franklin Small
The main advantage of trading using opposite Nuveen High and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High 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.| Nuveen High vs. Nuveen High Yield | Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen High Yield | Nuveen High vs. Nuveen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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