Correlation Between Franklin Mutual and Qs Small
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Qs 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 Franklin Mutual and Qs Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Qs Small Capitalization, you can compare the effects of market volatilities on Franklin Mutual and Qs 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 Franklin Mutual with a short position of Qs Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Qs Small.
Diversification Opportunities for Franklin Mutual and Qs Small
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and LMSIX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization and Franklin Mutual 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 Franklin Mutual Beacon are associated (or correlated) with Qs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Qs Small go up and down completely randomly.
Pair Corralation between Franklin Mutual and Qs Small
Assuming the 90 days horizon Franklin Mutual Beacon is expected to generate 0.85 times more return on investment than Qs Small. However, Franklin Mutual Beacon is 1.18 times less risky than Qs Small. It trades about -0.43 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about -0.41 per unit of risk. If you would invest 1,742 in Franklin Mutual Beacon on September 25, 2024 and sell it today you would lose (176.00) from holding Franklin Mutual Beacon or give up 10.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Qs Small Capitalization
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Qs Small Capitalization |
Franklin Mutual and Qs Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Qs Small
The main advantage of trading using opposite Franklin Mutual and Qs Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Qs 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 Qs Small will offset losses from the drop in Qs Small's long position.| Franklin Mutual vs. Barings Emerging Markets | Franklin Mutual vs. Locorr Market Trend | Franklin Mutual vs. Aqr Long Short Equity | Franklin Mutual vs. Extended Market Index |
| Qs Small vs. Franklin Mutual Beacon | Qs Small vs. Templeton Developing Markets | Qs Small vs. Franklin Mutual Global | Qs Small 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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