Correlation Between Franklin Small and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Ep 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 Franklin Small and Ep Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Small Cap and Ep Emerging Markets, you can compare the effects of market volatilities on Franklin Small and Ep 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 Franklin Small with a short position of Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Ep Emerging.
Diversification Opportunities for Franklin Small and Ep Emerging
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and EPASX is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets and Franklin Small 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 Franklin Small Cap are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Franklin Small i.e., Franklin Small and Ep Emerging go up and down completely randomly.
Pair Corralation between Franklin Small and Ep Emerging
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.64 times more return on investment than Ep Emerging. However, Franklin Small is 1.64 times more volatile than Ep Emerging Markets. It trades about 0.32 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest 1,594 in Franklin Small Cap on October 28, 2024 and sell it today you would earn a total of 89.00 from holding Franklin Small Cap or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Small Cap vs. Ep Emerging Markets
Performance |
| Timeline |
| Franklin Small Cap |
| Ep Emerging Markets |
Franklin Small and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Ep Emerging
The main advantage of trading using opposite Franklin Small and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Ep 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| Franklin Small vs. Alpine Ultra Short | Franklin Small vs. Transam Short Term Bond | Franklin Small vs. Jhancock Short Duration | Franklin Small vs. Aqr Sustainable Long Short |
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.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |