Correlation Between Oracle and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both Oracle 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 Oracle 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 Oracle and Franklin Small Mid Cap, you can compare the effects of market volatilities on Oracle 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 Oracle with a short position of Franklin Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Franklin Small-mid.
Diversification Opportunities for Oracle and Franklin Small-mid
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oracle and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Oracle 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 Oracle 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 Oracle 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 Oracle i.e., Oracle and Franklin Small-mid go up and down completely randomly.
Pair Corralation between Oracle and Franklin Small-mid
Given the investment horizon of 90 days Oracle is expected to generate 2.35 times more return on investment than Franklin Small-mid. However, Oracle is 2.35 times more volatile than Franklin Small Mid Cap. It trades about 0.16 of its potential returns per unit of risk. Franklin Small Mid Cap is currently generating about 0.14 per unit of risk. If you would invest 12,201 in Oracle on September 3, 2024 and sell it today you would earn a total of 6,283 from holding Oracle or generate 51.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oracle vs. Franklin Small Mid Cap
Performance |
| Timeline |
| Oracle |
| Franklin Small Mid |
Oracle and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Franklin Small-mid
The main advantage of trading using opposite Oracle and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle 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.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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