Correlation Between Franklin High and Columbia Small
Can any of the company-specific risk be diversified away by investing in both Franklin High and Columbia 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 High and Columbia Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Columbia Small Cap, you can compare the effects of market volatilities on Franklin High and Columbia 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 High with a short position of Columbia Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Columbia Small.
Diversification Opportunities for Franklin High and Columbia Small
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Columbia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small Cap and Franklin High 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 High Income are associated (or correlated) with Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Franklin High i.e., Franklin High and Columbia Small go up and down completely randomly.
Pair Corralation between Franklin High and Columbia Small
Assuming the 90 days horizon Franklin High Income is expected to generate 0.22 times more return on investment than Columbia Small. However, Franklin High Income is 4.6 times less risky than Columbia Small. It trades about 0.0 of its potential returns per unit of risk. Columbia Small Cap is currently generating about -0.36 per unit of risk. If you would invest 175.00 in Franklin High Income on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Franklin High Income or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin High Income vs. Columbia Small Cap
Performance |
Timeline |
Franklin High Income |
Columbia Small Cap |
Franklin High and Columbia Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin High and Columbia Small
The main advantage of trading using opposite Franklin High and Columbia Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Columbia 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 Columbia Small will offset losses from the drop in Columbia Small's long position.Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
Columbia Small vs. Columbia Porate Income | Columbia Small vs. Columbia Ultra Short | Columbia Small vs. Columbia Treasury Index | Columbia Small vs. Multi Manager Directional Alternative |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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