Correlation Between Small Cap and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Small Cap and Franklin Utilities 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 Small Cap and Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Franklin Utilities Fund, you can compare the effects of market volatilities on Small Cap and Franklin Utilities 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 Small Cap with a short position of Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Franklin Utilities.
Diversification Opportunities for Small Cap and Franklin Utilities
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities and Small Cap 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 Small Cap Stock are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Small Cap i.e., Small Cap and Franklin Utilities go up and down completely randomly.
Pair Corralation between Small Cap and Franklin Utilities
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.24 times more return on investment than Franklin Utilities. However, Small Cap is 1.24 times more volatile than Franklin Utilities Fund. It trades about 0.04 of its potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.04 per unit of risk. If you would invest 1,236 in Small Cap Stock on September 2, 2024 and sell it today you would earn a total of 293.00 from holding Small Cap Stock or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Franklin Utilities Fund
Performance |
| Timeline |
| Small Cap Stock |
| Franklin Utilities |
Small Cap and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Franklin Utilities
The main advantage of trading using opposite Small Cap and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Small Cap vs. Calamos Global Equity | Small Cap vs. Cutler Equity | Small Cap vs. Us Vector Equity | Small Cap vs. Small Cap Equity |
| Franklin Utilities vs. Siit Ultra Short | Franklin Utilities vs. Ab Select Longshort | Franklin Utilities vs. Franklin Federal Limited Term | Franklin Utilities vs. Vanguard Institutional Short Term |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| CEOs Directory Screen CEOs from public companies around the world |