Correlation Between Franklin Mutual and Siit Small

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

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

Diversification Opportunities for Franklin Mutual and Siit Small

0.74

Correlation Coefficient

Franklin Mutual  Siit Small

Poor diversification

The 3 months correlation between Franklin and Siit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Siit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Small Cap and Franklin Mutual 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 Mutual Global are associated (or correlated) with Siit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Small Cap has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Siit Small go up and down completely randomly.

Pair Corralation between Franklin Mutual and Siit Small

Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.77 times more return on investment than Siit Small. However, Franklin Mutual Global is 1.29 times less risky than Siit Small. It trades about -0.32 of its potential returns per unit of risk. Siit Small Cap is currently generating about -0.25 per unit of risk. If you would invest  3,195  in Franklin Mutual Global on October 7, 2024 and sell it today you would lose (407.00) from holding Franklin Mutual Global or give up 12.74% of portfolio value over 90 days.

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

Franklin Mutual Global  vs.  Siit Small Cap

Franklin Mutual Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Mutual Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Siit Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siit Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Siit Small 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 Mutual and Siit Small

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

The idea behind Franklin Mutual Global and Siit Small 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.