Correlation Between Barings Emerging and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Barings Emerging 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 Barings Emerging and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Franklin Emerging Market, you can compare the effects of market volatilities on Barings Emerging 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 Barings Emerging with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Franklin Emerging.
Diversification Opportunities for Barings Emerging and Franklin Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets 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 Barings 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 Barings Emerging Markets 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 Barings Emerging i.e., Barings Emerging and Franklin Emerging go up and down completely randomly.
Pair Corralation between Barings Emerging and Franklin Emerging
Assuming the 90 days horizon Barings Emerging is expected to generate 1.07 times less return on investment than Franklin Emerging. In addition to that, Barings Emerging is 1.31 times more volatile than Franklin Emerging Market. It trades about 0.23 of its total potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.33 per unit of volatility. If you would invest 1,161 in Franklin Emerging Market on November 6, 2024 and sell it today you would earn a total of 15.00 from holding Franklin Emerging Market or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Franklin Emerging Market
Performance |
| Timeline |
| Barings Emerging Markets |
| Franklin Emerging Market |
Barings Emerging and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Franklin Emerging
The main advantage of trading using opposite Barings Emerging and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging 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.| Barings Emerging vs. Mid Cap 15x Strategy | Barings Emerging vs. Commodities Strategy Fund | Barings Emerging vs. Growth Strategy Fund | Barings Emerging vs. Angel Oak Multi Strategy |
| Franklin Emerging vs. Hsbc Treasury Money | Franklin Emerging vs. Dws Government Money | Franklin Emerging vs. Aig Government Money | Franklin Emerging vs. Franklin Government Money |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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