Correlation Between Ab Small and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Ab Small and Franklin Growth 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 Ab Small and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Franklin Growth Fund, you can compare the effects of market volatilities on Ab Small and Franklin Growth 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 Ab Small with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Franklin Growth.
Diversification Opportunities for Ab Small and Franklin Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SCYVX and Franklin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth and Ab Small 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 Ab Small Cap are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Ab Small i.e., Ab Small and Franklin Growth go up and down completely randomly.
Pair Corralation between Ab Small and Franklin Growth
Assuming the 90 days horizon Ab Small is expected to generate 1.5 times less return on investment than Franklin Growth. In addition to that, Ab Small is 1.31 times more volatile than Franklin Growth Fund. It trades about 0.04 of its total potential returns per unit of risk. Franklin Growth Fund is currently generating about 0.09 per unit of volatility. If you would invest 10,084 in Franklin Growth Fund on September 13, 2024 and sell it today you would earn a total of 4,858 from holding Franklin Growth Fund or generate 48.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ab Small Cap vs. Franklin Growth Fund
Performance |
| Timeline |
| Ab Small Cap |
| Franklin Growth |
Ab Small and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Franklin Growth
The main advantage of trading using opposite Ab Small and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Ab Small vs. American Century Etf | Ab Small vs. Valic Company I | Ab Small vs. Northern Small Cap | Ab Small vs. Small Cap Value Fund |
| Franklin Growth vs. Ab Small Cap | Franklin Growth vs. Amg River Road | Franklin Growth vs. Royce Opportunity Fund | Franklin Growth vs. Great West Loomis Sayles |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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