Correlation Between Smallcap Fund and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund 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 Smallcap Fund and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Franklin Small Cap, you can compare the effects of market volatilities on Smallcap Fund 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 Smallcap Fund with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Franklin Small.
Diversification Opportunities for Smallcap Fund and Franklin Small
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka 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 Smallcap Fund 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 Smallcap Fund Fka 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 Smallcap Fund i.e., Smallcap Fund and Franklin Small go up and down completely randomly.
Pair Corralation between Smallcap Fund and Franklin Small
Assuming the 90 days horizon Smallcap Fund Fka is expected to under-perform the Franklin Small. In addition to that, Smallcap Fund is 1.08 times more volatile than Franklin Small Cap. It trades about -0.23 of its total potential returns per unit of risk. Franklin Small Cap is currently generating about -0.14 per unit of volatility. If you would invest 1,665 in Franklin Small Cap on October 11, 2024 and sell it today you would lose (58.00) from holding Franklin Small Cap or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Franklin Small Cap
Performance |
| Timeline |
| Smallcap Fund Fka |
| Franklin Small Cap |
Smallcap Fund and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Franklin Small
The main advantage of trading using opposite Smallcap Fund and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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.| Smallcap Fund vs. Franklin Small Cap | Smallcap Fund vs. Small Pany Growth | Smallcap Fund vs. Praxis Small Cap | Smallcap Fund vs. Glg Intl Small |
| Franklin Small vs. T Rowe Price | Franklin Small vs. Ab Equity Income | Franklin Small vs. T Rowe Price | Franklin Small vs. Enhanced Fixed Income |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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