Correlation Between Westwood Quality and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Westwood Quality 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 Westwood Quality and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Quality Smidcap and Franklin Growth Opportunities, you can compare the effects of market volatilities on Westwood Quality 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 Westwood Quality with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Quality and Franklin Growth.
Diversification Opportunities for Westwood Quality and Franklin Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westwood and Franklin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Quality Smidcap and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Westwood Quality 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 Westwood Quality Smidcap 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 Oppo has no effect on the direction of Westwood Quality i.e., Westwood Quality and Franklin Growth go up and down completely randomly.
Pair Corralation between Westwood Quality and Franklin Growth
Assuming the 90 days horizon Westwood Quality is expected to generate 1.22 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Westwood Quality Smidcap is 1.19 times less risky than Franklin Growth. It trades about 0.06 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,008 in Franklin Growth Opportunities on September 12, 2024 and sell it today you would earn a total of 1,359 from holding Franklin Growth Opportunities or generate 27.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Quality Smidcap vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Westwood Quality Smidcap |
| Franklin Growth Oppo |
Westwood Quality and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Quality and Franklin Growth
The main advantage of trading using opposite Westwood Quality and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Quality 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.| Westwood Quality vs. Aqr Diversified Arbitrage | Westwood Quality vs. Guggenheim Diversified Income | Westwood Quality vs. Federated Hermes Conservative | Westwood Quality vs. Wilmington Diversified Income |
| Franklin Growth vs. American Funds The | Franklin Growth vs. American Funds The | Franklin Growth vs. Growth Fund Of | Franklin Growth vs. Growth Fund Of |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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