Correlation Between Brandes Emerging and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging and Franklin Mutual 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 Brandes Emerging and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandes Emerging Markets and Franklin Mutual Global, you can compare the effects of market volatilities on Brandes Emerging and Franklin Mutual 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 Brandes Emerging with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Franklin Mutual.
Diversification Opportunities for Brandes Emerging and Franklin Mutual
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRANDES and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Brandes Emerging 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 Brandes Emerging Markets are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Brandes Emerging i.e., Brandes Emerging and Franklin Mutual go up and down completely randomly.
Pair Corralation between Brandes Emerging and Franklin Mutual
Assuming the 90 days horizon Brandes Emerging Markets is expected to under-perform the Franklin Mutual. In addition to that, Brandes Emerging is 1.31 times more volatile than Franklin Mutual Global. It trades about -0.23 of its total potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.19 per unit of volatility. If you would invest 3,136 in Franklin Mutual Global on September 4, 2024 and sell it today you would earn a total of 73.00 from holding Franklin Mutual Global or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Emerging Markets vs. Franklin Mutual Global
Performance |
| Timeline |
| Brandes Emerging Markets |
| Franklin Mutual Global |
Brandes Emerging and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Franklin Mutual
The main advantage of trading using opposite Brandes Emerging and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Brandes Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Small | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities |
| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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