Correlation Between Victory Floating and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Victory Floating 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 Victory Floating and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Floating Rate and Franklin Small Cap, you can compare the effects of market volatilities on Victory Floating 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 Victory Floating with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Floating and Franklin Small.
Diversification Opportunities for Victory Floating and Franklin Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Victory and Franklin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Victory Floating Rate 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 Victory Floating 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 Victory Floating Rate 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 Victory Floating i.e., Victory Floating and Franklin Small go up and down completely randomly.
Pair Corralation between Victory Floating and Franklin Small
Assuming the 90 days horizon Victory Floating is expected to generate 2.38 times less return on investment than Franklin Small. But when comparing it to its historical volatility, Victory Floating Rate is 6.07 times less risky than Franklin Small. It trades about 0.19 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,405 in Franklin Small Cap on September 14, 2024 and sell it today you would earn a total of 1,406 from holding Franklin Small Cap or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Floating Rate vs. Franklin Small Cap
Performance |
| Timeline |
| Victory Floating Rate |
| Franklin Small Cap |
Victory Floating and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Floating and Franklin Small
The main advantage of trading using opposite Victory Floating and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Floating 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.| Victory Floating vs. Franklin Small Cap | Victory Floating vs. Ab Small Cap | Victory Floating vs. Sp Smallcap 600 | Victory Floating vs. Guidemark Smallmid Cap |
| Franklin Small vs. Small Pany Growth | Franklin Small vs. Foundry Partners Fundamental | Franklin Small vs. Ab Small Cap | Franklin Small vs. Guidemark Smallmid 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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