Correlation Between Aristotle Funds and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Aristotle Funds 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 Aristotle Funds and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristotle Funds Series and Franklin Emerging Market, you can compare the effects of market volatilities on Aristotle Funds 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 Aristotle Funds with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle Funds and Franklin Emerging.
Diversification Opportunities for Aristotle Funds and Franklin Emerging
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aristotle and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle Funds Series 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 Aristotle Funds 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 Aristotle Funds Series 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 Aristotle Funds i.e., Aristotle Funds and Franklin Emerging go up and down completely randomly.
Pair Corralation between Aristotle Funds and Franklin Emerging
Assuming the 90 days horizon Aristotle Funds is expected to generate 1.12 times less return on investment than Franklin Emerging. In addition to that, Aristotle Funds is 3.79 times more volatile than Franklin Emerging Market. It trades about 0.04 of its total potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.19 per unit of volatility. If you would invest 930.00 in Franklin Emerging Market on August 30, 2024 and sell it today you would earn a total of 285.00 from holding Franklin Emerging Market or generate 30.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristotle Funds Series vs. Franklin Emerging Market
Performance |
| Timeline |
| Aristotle Funds Series |
| Franklin Emerging Market |
Aristotle Funds and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristotle Funds and Franklin Emerging
The main advantage of trading using opposite Aristotle Funds and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristotle Funds 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.| Aristotle Funds vs. Transamerica Cleartrack Retirement | Aristotle Funds vs. Lifestyle Ii Moderate | Aristotle Funds vs. Dimensional Retirement Income | Aristotle Funds vs. Franklin Lifesmart Retirement |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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