Correlation Between Franklin Small-mid and BCULC

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

By analyzing existing cross correlation between Franklin Small Mid Cap and BCULC 35 15 FEB 29, you can compare the effects of market volatilities on Franklin Small-mid and BCULC 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-mid with a short position of BCULC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small-mid and BCULC.

Diversification Opportunities for Franklin Small-mid and BCULC

0.23

Correlation Coefficient

Franklin Small-mid  BCULC

Modest diversification

The 3 months correlation between Franklin and BCULC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Mid Cap and BCULC 35 15 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCULC 35 15 and Franklin Small-mid 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 Mid Cap are associated (or correlated) with BCULC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCULC 35 15 has no effect on the direction of Franklin Small-mid i.e., Franklin Small-mid and BCULC go up and down completely randomly.

Pair Corralation between Franklin Small-mid and BCULC

Assuming the 90 days horizon Franklin Small Mid Cap is expected to generate 0.95 times more return on investment than BCULC. However, Franklin Small Mid Cap is 1.06 times less risky than BCULC. It trades about 0.06 of its potential returns per unit of risk. BCULC 35 15 FEB 29 is currently generating about 0.04 per unit of risk. If you would invest  2,947  in Franklin Small Mid Cap on October 15, 2024 and sell it today you would earn a total of  982.00  from holding Franklin Small Mid Cap or generate 33.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	27.68%
Values	Daily Returns

Franklin Small Mid Cap  vs.  BCULC 35 15 FEB 29

Franklin Small Mid

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Small Mid Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Franklin Small-mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BCULC 35 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCULC 35 15 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BCULC 35 15 FEB 29 investors.

Pair Trading with Franklin Small-mid and BCULC

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

The idea behind Franklin Small Mid Cap and BCULC 35 15 FEB 29 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.