Correlation Between Sit Small and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Sit Small and Franklin Federal 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 Sit Small and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Small Cap and Franklin Federal Limited Term, you can compare the effects of market volatilities on Sit Small and Franklin Federal 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 Sit Small with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Franklin Federal.
Diversification Opportunities for Sit Small and Franklin Federal
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sit and Franklin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Sit 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 Sit Small Cap are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Sit Small i.e., Sit Small and Franklin Federal go up and down completely randomly.
Pair Corralation between Sit Small and Franklin Federal
Assuming the 90 days horizon Sit Small Cap is expected to generate 9.67 times more return on investment than Franklin Federal. However, Sit Small is 9.67 times more volatile than Franklin Federal Limited Term. It trades about 0.05 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.12 per unit of risk. If you would invest 1,794 in Sit Small Cap on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Sit Small Cap or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Sit Small Cap |
| Franklin Federal Lim |
Sit Small and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Franklin Federal
The main advantage of trading using opposite Sit Small and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Sit Small vs. Champlain Small | Sit Small vs. Lebenthal Lisanti Small | Sit Small vs. Guidemark Smallmid Cap | Sit Small vs. Siit Small Mid |
| Franklin Federal vs. Franklin Mutual Beacon | Franklin Federal vs. Templeton Developing Markets | Franklin Federal vs. Franklin Mutual Global | Franklin Federal vs. Franklin Mutual Global |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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