Correlation Between Small Cap and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Small Cap and Franklin Mutual 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 Mutual 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 Mutual European, you can compare the effects of market volatilities on Small Cap and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Franklin Mutual.
Diversification Opportunities for Small Cap and Franklin Mutual
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Franklin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Franklin Mutual European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual European 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual European has no effect on the direction of Small Cap i.e., Small Cap and Franklin Mutual go up and down completely randomly.
Pair Corralation between Small Cap and Franklin Mutual
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.54 times more return on investment than Franklin Mutual. However, Small Cap is 1.54 times more volatile than Franklin Mutual European. It trades about 0.05 of its potential returns per unit of risk. Franklin Mutual European is currently generating about 0.05 per unit of risk. If you would invest 1,170 in Small Cap Stock on September 4, 2024 and sell it today you would earn a total of 359.00 from holding Small Cap Stock or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Small Cap Stock vs. Franklin Mutual European
Performance |
| Timeline |
| Small Cap Stock |
| Franklin Mutual European |
Small Cap and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Franklin Mutual
The main advantage of trading using opposite Small Cap and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Small Cap vs. Income Fund Income | Small Cap vs. Usaa Nasdaq 100 | Small Cap vs. Intermediate Term Bond Fund | Small Cap vs. Usaa Intermediate Term |
| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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