Correlation Between Dreyfus Global and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Dreyfus Global 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 Global 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 Global Real and Franklin Emerging Market, you can compare the effects of market volatilities on Dreyfus Global 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 Global with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Global and Franklin Emerging.
Diversification Opportunities for Dreyfus Global and Franklin Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dreyfus and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Global Real 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 Global 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 Global Real 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 Global i.e., Dreyfus Global and Franklin Emerging go up and down completely randomly.
Pair Corralation between Dreyfus Global and Franklin Emerging
Assuming the 90 days horizon Dreyfus Global Real is expected to generate 1.6 times more return on investment than Franklin Emerging. However, Dreyfus Global is 1.6 times more volatile than Franklin Emerging Market. It trades about 0.35 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.22 per unit of risk. If you would invest 1,598 in Dreyfus Global Real on September 1, 2024 and sell it today you would earn a total of 46.00 from holding Dreyfus Global Real or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dreyfus Global Real vs. Franklin Emerging Market
Performance |
| Timeline |
| Dreyfus Global Real |
| Franklin Emerging Market |
Dreyfus Global and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Global and Franklin Emerging
The main advantage of trading using opposite Dreyfus Global and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Global 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 Global vs. Franklin Emerging Market | Dreyfus Global vs. Pace International Emerging | Dreyfus Global vs. Doubleline Emerging Markets | Dreyfus Global vs. Dws Emerging Markets |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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