Correlation Between Cref Inflation-linked and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked 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 Cref Inflation-linked and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Franklin Small Cap, you can compare the effects of market volatilities on Cref Inflation-linked 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 Cref Inflation-linked with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Franklin Small.
Diversification Opportunities for Cref Inflation-linked and Franklin Small
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cref and FRANKLIN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond 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 Cref Inflation-linked 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 Cref Inflation Linked Bond 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 Cref Inflation-linked i.e., Cref Inflation-linked and Franklin Small go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Franklin Small
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 6.2 times less return on investment than Franklin Small. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 5.68 times less risky than Franklin Small. It trades about 0.24 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,703 in Franklin Small Cap on October 25, 2024 and sell it today you would earn a total of 131.00 from holding Franklin Small Cap or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Franklin Small Cap
Performance |
| Timeline |
| Cref Inflation Linked |
| Franklin Small Cap |
Cref Inflation-linked and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Franklin Small
The main advantage of trading using opposite Cref Inflation-linked and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked 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.| Cref Inflation-linked vs. Pace High Yield | Cref Inflation-linked vs. Buffalo High Yield | Cref Inflation-linked vs. Voya High Yield | Cref Inflation-linked vs. Prudential High Yield |
| Franklin Small vs. Credit Suisse Multialternative | Franklin Small vs. Cref Inflation Linked Bond | Franklin Small vs. Fidelity Sai Inflationfocused | Franklin Small vs. Credit Suisse Multialternative |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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