Correlation Between Franklin Small and Small Cap
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Small Cap 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 Small Cap 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 Small Cap Value, you can compare the effects of market volatilities on Franklin Small and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Small Cap.
Diversification Opportunities for Franklin Small and Small Cap
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Small is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Franklin Small i.e., Franklin Small and Small Cap go up and down completely randomly.
Pair Corralation between Franklin Small and Small Cap
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.02 times more return on investment than Small Cap. However, Franklin Small is 1.02 times more volatile than Small Cap Value. It trades about -0.01 of its potential returns per unit of risk. Small Cap Value is currently generating about -0.07 per unit of risk. If you would invest 5,757 in Franklin Small Cap on August 17, 2025 and sell it today you would lose (79.00) from holding Franklin Small Cap or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Small Cap Value
Performance |
| Timeline |
| Franklin Small Cap |
| Small Cap Value |
Franklin Small and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Small Cap
The main advantage of trading using opposite Franklin Small and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Franklin Small vs. T Rowe Price | Franklin Small vs. American Beacon Small | Franklin Small vs. American Beacon Small | Franklin Small vs. Franklin Small Mid Cap |
| Small Cap vs. Small Cap Growth | Small Cap vs. Small Cap Growth | Small Cap vs. Blackrock Advantage Small | Small Cap vs. Blackrock Advantage Small |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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