Correlation Between Franklin Small and Janus Global

Can any of the company-specific risk be diversified away by investing in both Franklin Small and Janus Global 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 Janus Global 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 Janus Global Research, you can compare the effects of market volatilities on Franklin Small and Janus Global 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 Janus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Janus Global.

Diversification Opportunities for Franklin Small and Janus Global

0.41

Correlation Coefficient

Franklin Small  Janus Global

Very weak diversification

The 3 months correlation between Franklin and Janus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Mid Cap and Janus Global Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Research 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 Mid Cap are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Research has no effect on the direction of Franklin Small i.e., Franklin Small and Janus Global go up and down completely randomly.

Pair Corralation between Franklin Small and Janus Global

Assuming the 90 days horizon Franklin Small Mid Cap is expected to generate 0.78 times more return on investment than Janus Global. However, Franklin Small Mid Cap is 1.29 times less risky than Janus Global. It trades about 0.2 of its potential returns per unit of risk. Janus Global Research is currently generating about -0.01 per unit of risk. If you would invest  4,389  in Franklin Small Mid Cap on September 17, 2024 and sell it today you would earn a total of  513.00  from holding Franklin Small Mid Cap or generate 11.69% return on investment over 90 days.

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

Franklin Small Mid Cap  vs.  Janus Global Research

Franklin Small Mid

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Small Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Franklin Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Janus Global Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Global Research has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Janus Global 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 Small and Janus Global

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

The idea behind Franklin Small Mid Cap and Janus Global Research 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.