Correlation Between NYSE Composite and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Franklin Small-mid 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 NYSE Composite and Franklin Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin Small Mid Cap, you can compare the effects of market volatilities on NYSE Composite and Franklin Small-mid 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 NYSE Composite with a short position of Franklin Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin Small-mid.
Diversification Opportunities for NYSE Composite and Franklin Small-mid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid and NYSE Composite 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 NYSE Composite are associated (or correlated) with Franklin Small-mid. 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 Mid has no effect on the direction of NYSE Composite i.e., NYSE Composite and Franklin Small-mid go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin Small-mid
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.35 times less return on investment than Franklin Small-mid. But when comparing it to its historical volatility, NYSE Composite is 1.37 times less risky than Franklin Small-mid. It trades about 0.14 of its potential returns per unit of risk. Franklin Small Mid Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,385 in Franklin Small Mid Cap on September 3, 2024 and sell it today you would earn a total of 738.00 from holding Franklin Small Mid Cap or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Franklin Small Mid Cap
Performance |
| Timeline |
NYSE Composite and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin Small Mid Cap
Pair trading matchups for Franklin Small-mid
Pair Trading with NYSE Composite and Franklin Small-mid
The main advantage of trading using opposite NYSE Composite and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Franklin Small-mid 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-mid will offset losses from the drop in Franklin Small-mid's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Franklin Small-mid vs. Dodge Cox Stock | Franklin Small-mid vs. Tax Managed Large Cap | Franklin Small-mid vs. Pace Large Value | Franklin Small-mid vs. Qs Large Cap |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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