Correlation Between Inverse Nasdaq and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq 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 Inverse Nasdaq and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Franklin Small Cap, you can compare the effects of market volatilities on Inverse Nasdaq 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 Inverse Nasdaq with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq and Franklin Small.
Diversification Opportunities for Inverse Nasdaq and Franklin Small
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and Franklin is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy 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 Inverse Nasdaq 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 Inverse Nasdaq 100 Strategy 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 Inverse Nasdaq i.e., Inverse Nasdaq and Franklin Small go up and down completely randomly.
Pair Corralation between Inverse Nasdaq and Franklin Small
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to generate 1.1 times more return on investment than Franklin Small. However, Inverse Nasdaq is 1.1 times more volatile than Franklin Small Cap. It trades about 0.26 of its potential returns per unit of risk. Franklin Small Cap is currently generating about -0.18 per unit of risk. If you would invest 1,027 in Inverse Nasdaq 100 Strategy on October 16, 2024 and sell it today you would earn a total of 64.00 from holding Inverse Nasdaq 100 Strategy or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Franklin Small Cap
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Franklin Small Cap |
Inverse Nasdaq and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq and Franklin Small
The main advantage of trading using opposite Inverse Nasdaq and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq 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.| Inverse Nasdaq vs. Lord Abbett Short | Inverse Nasdaq vs. Siit High Yield | Inverse Nasdaq vs. Guggenheim High Yield | Inverse Nasdaq vs. Fidelity Capital Income |
| Franklin Small vs. Pace Smallmedium Value | Franklin Small vs. Touchstone Small Cap | Franklin Small vs. Small Pany Growth | Franklin Small vs. Aqr Small 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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