Correlation Between Franklin Emerging and Capital Group
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Capital Group 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 Emerging and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Emerging Market and Capital Group California, you can compare the effects of market volatilities on Franklin Emerging and Capital Group 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 Emerging with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Capital Group.
Diversification Opportunities for Franklin Emerging and Capital Group
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Capital is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Capital Group California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group California and Franklin 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 Franklin Emerging Market are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group California has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Capital Group go up and down completely randomly.
Pair Corralation between Franklin Emerging and Capital Group
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 2.05 times more return on investment than Capital Group. However, Franklin Emerging is 2.05 times more volatile than Capital Group California. It trades about 0.23 of its potential returns per unit of risk. Capital Group California is currently generating about 0.09 per unit of risk. If you would invest 954.00 in Franklin Emerging Market on August 31, 2024 and sell it today you would earn a total of 261.00 from holding Franklin Emerging Market or generate 27.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Capital Group California
Performance |
| Timeline |
| Franklin Emerging Market |
| Capital Group California |
Franklin Emerging and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Capital Group
The main advantage of trading using opposite Franklin Emerging and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Franklin Emerging vs. T Rowe Price | Franklin Emerging vs. Morningstar Unconstrained Allocation | Franklin Emerging vs. Goldman Sachs Large | Franklin Emerging vs. Federated Kaufmann Large |
| Capital Group vs. Siit Emerging Markets | Capital Group vs. Origin Emerging Markets | Capital Group vs. Angel Oak Multi Strategy | Capital Group vs. Franklin Emerging Market |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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