Correlation Between Franklin and Ultrasmall-cap Profund

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

By analyzing existing cross correlation between Franklin Government Money and Ultrasmall Cap Profund Ultrasmall Cap, you can compare the effects of market volatilities on Franklin and Ultrasmall-cap Profund 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 with a short position of Ultrasmall-cap Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Ultrasmall-cap Profund.

Diversification Opportunities for Franklin and Ultrasmall-cap Profund

0.0

Correlation Coefficient

Franklin  Ultrasmall-cap Profund

Pay attention - limited upside

The 3 months correlation between Franklin and Ultrasmall-cap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Ultrasmall Cap Profund Ultrasm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrasmall Cap Profund and Franklin 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 Government Money are associated (or correlated) with Ultrasmall-cap Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrasmall Cap Profund has no effect on the direction of Franklin i.e., Franklin and Ultrasmall-cap Profund go up and down completely randomly.

Pair Corralation between Franklin and Ultrasmall-cap Profund

Assuming the 90 days horizon Franklin Government Money is expected to under-perform the Ultrasmall-cap Profund. In addition to that, Franklin is 1.37 times more volatile than Ultrasmall Cap Profund Ultrasmall Cap. It trades about -0.03 of its total potential returns per unit of risk. Ultrasmall Cap Profund Ultrasmall Cap is currently generating about 0.03 per unit of volatility. If you would invest  5,600  in Ultrasmall Cap Profund Ultrasmall Cap on October 11, 2024 and sell it today you would earn a total of  1,125  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 20.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Franklin Government Money  vs.  Ultrasmall Cap Profund Ultrasm

Franklin Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultrasmall Cap Profund

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ultrasmall Cap Profund Ultrasmall Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ultrasmall-cap Profund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin and Ultrasmall-cap Profund

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

The idea behind Franklin Government Money and Ultrasmall Cap Profund Ultrasmall Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.