Correlation Between Pace Small/medium and Ftfa Franklin
Can any of the company-specific risk be diversified away by investing in both Pace Small/medium and Ftfa Franklin 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 Pace Small/medium and Ftfa Franklin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Growth and Ftfa Franklin Templeton Growth, you can compare the effects of market volatilities on Pace Small/medium and Ftfa Franklin 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 Pace Small/medium with a short position of Ftfa Franklin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and Ftfa Franklin.
Diversification Opportunities for Pace Small/medium and Ftfa Franklin
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Ftfa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Growth and Ftfa Franklin Templeton Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ftfa Franklin Templeton and Pace Small/medium 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 Pace Smallmedium Growth are associated (or correlated) with Ftfa Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ftfa Franklin Templeton has no effect on the direction of Pace Small/medium i.e., Pace Small/medium and Ftfa Franklin go up and down completely randomly.
Pair Corralation between Pace Small/medium and Ftfa Franklin
Assuming the 90 days horizon Pace Smallmedium Growth is expected to generate 1.83 times more return on investment than Ftfa Franklin. However, Pace Small/medium is 1.83 times more volatile than Ftfa Franklin Templeton Growth. It trades about 0.06 of its potential returns per unit of risk. Ftfa Franklin Templeton Growth is currently generating about 0.09 per unit of risk. If you would invest 1,058 in Pace Smallmedium Growth on September 4, 2024 and sell it today you would earn a total of 365.00 from holding Pace Smallmedium Growth or generate 34.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Smallmedium Growth vs. Ftfa Franklin Templeton Growth
Performance |
| Timeline |
| Pace Smallmedium Growth |
| Ftfa Franklin Templeton |
Pace Small/medium and Ftfa Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Small/medium and Ftfa Franklin
The main advantage of trading using opposite Pace Small/medium and Ftfa Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Small/medium position performs unexpectedly, Ftfa Franklin 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 Ftfa Franklin will offset losses from the drop in Ftfa Franklin's long position.| Pace Small/medium vs. Harbor Diversified International | Pace Small/medium vs. Delaware Limited Term Diversified | Pace Small/medium vs. Northern Small Cap | Pace Small/medium vs. Legg Mason Bw |
| Ftfa Franklin vs. Franklin Mutual Beacon | Ftfa Franklin vs. Templeton Developing Markets | Ftfa Franklin vs. Franklin Mutual Global | Ftfa Franklin vs. Franklin Mutual Global |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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