Correlation Between Dreyfus Bond and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Dreyfus Bond 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 Dreyfus Bond and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Bond Market and Franklin Emerging Market, you can compare the effects of market volatilities on Dreyfus Bond 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 Dreyfus Bond with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Bond and Franklin Emerging.
Diversification Opportunities for Dreyfus Bond and Franklin Emerging
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dreyfus and FRANKLIN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Bond Market 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 Dreyfus Bond 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 Dreyfus Bond Market 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 Dreyfus Bond i.e., Dreyfus Bond and Franklin Emerging go up and down completely randomly.
Pair Corralation between Dreyfus Bond and Franklin Emerging
Assuming the 90 days horizon Dreyfus Bond is expected to generate 8.12 times less return on investment than Franklin Emerging. In addition to that, Dreyfus Bond is 1.35 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 0.44 per unit of volatility. If you would invest 1,151 in Franklin Emerging Market on November 1, 2024 and sell it today you would earn a total of 22.00 from holding Franklin Emerging Market or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Bond Market vs. Franklin Emerging Market
Performance |
| Timeline |
| Dreyfus Bond Market |
| Franklin Emerging Market |
Dreyfus Bond and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Bond and Franklin Emerging
The main advantage of trading using opposite Dreyfus Bond and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Bond 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.| Dreyfus Bond vs. Western Assets Emerging | Dreyfus Bond vs. Wasatch Frontier Emerging | Dreyfus Bond vs. Pimco Moditiesplus Strategy | Dreyfus Bond vs. Great West Emerging Markets |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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