Correlation Between Ashmore Emerging and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Ashmore Emerging and Franklin Federal 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 Ashmore Emerging and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Emerging Markets and Franklin Federal Tax Free, you can compare the effects of market volatilities on Ashmore Emerging and Franklin Federal 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 Ashmore Emerging with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Emerging and Franklin Federal.
Diversification Opportunities for Ashmore Emerging and Franklin Federal
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashmore and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Emerging Markets and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Ashmore 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 Ashmore Emerging Markets are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Ashmore Emerging i.e., Ashmore Emerging and Franklin Federal go up and down completely randomly.
Pair Corralation between Ashmore Emerging and Franklin Federal
Assuming the 90 days horizon Ashmore Emerging is expected to generate 7.31 times less return on investment than Franklin Federal. But when comparing it to its historical volatility, Ashmore Emerging Markets is 1.72 times less risky than Franklin Federal. It trades about 0.05 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Franklin Federal Tax Free on September 2, 2024 and sell it today you would earn a total of 14.00 from holding Franklin Federal Tax Free or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Emerging Markets vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Ashmore Emerging Markets |
| Franklin Federal Tax |
Ashmore Emerging and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Emerging and Franklin Federal
The main advantage of trading using opposite Ashmore Emerging and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Emerging position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Ashmore Emerging vs. Aqr Diversified Arbitrage | Ashmore Emerging vs. Lord Abbett Diversified | Ashmore Emerging vs. Delaware Limited Term Diversified | Ashmore Emerging vs. Evaluator Conservative Rms |
| Franklin Federal vs. Eagle Mlp Strategy | Franklin Federal vs. Origin Emerging Markets | Franklin Federal vs. Doubleline Emerging Markets | Franklin Federal vs. Ashmore 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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