Correlation Between Franklin Small and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Franklin Small and Tiaa Cref 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 Small and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Small Cap and Tiaa Cref Small Cap Equity, you can compare the effects of market volatilities on Franklin Small and Tiaa Cref 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 Small with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Tiaa Cref.

Diversification Opportunities for Franklin Small and Tiaa Cref

0.5

Correlation Coefficient

Franklin Small  Tiaa Cref

Very weak diversification

The 3 months correlation between Franklin and Tiaa is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Tiaa Cref Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Small and Franklin 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 Franklin Small Cap are associated (or correlated) with Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Small has no effect on the direction of Franklin Small i.e., Franklin Small and Tiaa Cref go up and down completely randomly.

Pair Corralation between Franklin Small and Tiaa Cref

Assuming the 90 days horizon Franklin Small Cap is expected to generate 0.93 times more return on investment than Tiaa Cref. However, Franklin Small Cap is 1.07 times less risky than Tiaa Cref. It trades about 0.06 of its potential returns per unit of risk. Tiaa Cref Small Cap Equity is currently generating about 0.03 per unit of risk. If you would invest  1,174  in Franklin Small Cap on October 11, 2024 and sell it today you would earn a total of  445.00  from holding Franklin Small Cap or generate 37.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Small Cap  vs.  Tiaa Cref Small Cap Equity

Franklin Small Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Franklin Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa Cref Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Small Cap Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Franklin Small and Tiaa Cref

The main advantage of trading using opposite Franklin Small and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Tiaa Cref 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 Tiaa Cref will offset losses from the drop in Tiaa Cref's long position.

The idea behind Franklin Small Cap and Tiaa Cref Small Cap Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.