Correlation Between Strategic Allocation: and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation: and Franklin Emerging 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 Strategic Allocation: and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Aggressive and Franklin Emerging Market, you can compare the effects of market volatilities on Strategic Allocation: and Franklin Emerging 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 Strategic Allocation: with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation: and Franklin Emerging.
Diversification Opportunities for Strategic Allocation: and Franklin Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STRATEGIC and Franklin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and Franklin Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Emerging Market and Strategic Allocation: 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 Strategic Allocation Aggressive are associated (or correlated) with Franklin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Emerging Market has no effect on the direction of Strategic Allocation: i.e., Strategic Allocation: and Franklin Emerging go up and down completely randomly.
Pair Corralation between Strategic Allocation: and Franklin Emerging
Assuming the 90 days horizon Strategic Allocation Aggressive is expected to generate 2.6 times more return on investment than Franklin Emerging. However, Strategic Allocation: is 2.6 times more volatile than Franklin Emerging Market. It trades about 0.22 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.14 per unit of risk. If you would invest 835.00 in Strategic Allocation Aggressive on August 29, 2024 and sell it today you would earn a total of 25.00 from holding Strategic Allocation Aggressive or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Strategic Allocation Aggressiv vs. Franklin Emerging Market
Performance |
| Timeline |
| Strategic Allocation: |
| Franklin Emerging Market |
Strategic Allocation: and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation: and Franklin Emerging
The main advantage of trading using opposite Strategic Allocation: and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation: position performs unexpectedly, Franklin Emerging 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 Franklin Emerging will offset losses from the drop in Franklin Emerging's long position.| Strategic Allocation: vs. Federated Emerging Market | Strategic Allocation: vs. T Rowe Price | Strategic Allocation: vs. Barings Emerging Markets | Strategic Allocation: vs. Angel Oak Multi Strategy |
| Franklin Emerging vs. Upright Assets Allocation | Franklin Emerging vs. Qs Large Cap | Franklin Emerging vs. Dodge Cox Stock | Franklin Emerging vs. Strategic Allocation Aggressive |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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