Correlation Between Franklin Small and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Small and Vanguard 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 Vanguard 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 Vanguard Emerging Markets, you can compare the effects of market volatilities on Franklin Small and Vanguard 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 Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Small and Vanguard Emerging.
Diversification Opportunities for Franklin Small and Vanguard Emerging
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Vanguard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Small Cap and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Franklin Small i.e., Franklin Small and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Franklin Small and Vanguard Emerging
Assuming the 90 days horizon Franklin Small Cap is expected to generate 1.26 times more return on investment than Vanguard Emerging. However, Franklin Small is 1.26 times more volatile than Vanguard Emerging Markets. It trades about 0.25 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.08 per unit of risk. If you would invest 1,581 in Franklin Small Cap on October 20, 2024 and sell it today you would earn a total of 70.00 from holding Franklin Small Cap or generate 4.43% 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. Vanguard Emerging Markets
Performance |
| Timeline |
| Franklin Small Cap |
| Vanguard Emerging Markets |
Franklin Small and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Small and Vanguard Emerging
The main advantage of trading using opposite Franklin Small and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Small position performs unexpectedly, Vanguard 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Franklin Small vs. Doubleline Core Fixed | Franklin Small vs. Artisan Select Equity | Franklin Small vs. Gmo Global Equity | Franklin Small vs. Us Vector Equity |
| Vanguard Emerging vs. Franklin Small Cap | Vanguard Emerging vs. Lebenthal Lisanti Small | Vanguard Emerging vs. Df Dent Small | Vanguard Emerging vs. Praxis Small Cap |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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