Correlation Between Franklin Emerging and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Dreyfus Natural 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 Dreyfus Natural 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 Dreyfus Natural Resources, you can compare the effects of market volatilities on Franklin Emerging and Dreyfus Natural 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 Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Dreyfus Natural.
Diversification Opportunities for Franklin Emerging and Dreyfus Natural
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Dreyfus is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources 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 Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Franklin Emerging and Dreyfus Natural
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.25 times more return on investment than Dreyfus Natural. However, Franklin Emerging Market is 4.08 times less risky than Dreyfus Natural. It trades about 0.11 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.02 per unit of risk. If you would invest 967.00 in Franklin Emerging Market on October 15, 2024 and sell it today you would earn a total of 190.00 from holding Franklin Emerging Market or generate 19.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Franklin Emerging Market |
| Dreyfus Natural Resources |
Franklin Emerging and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Dreyfus Natural
The main advantage of trading using opposite Franklin Emerging and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Dreyfus Natural 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 Dreyfus Natural will offset losses from the drop in Dreyfus Natural's long position.| Franklin Emerging vs. Absolute Convertible Arbitrage | Franklin Emerging vs. Fidelity Vertible Securities | Franklin Emerging vs. Lord Abbett Vertible | Franklin Emerging vs. Virtus Convertible |
| Dreyfus Natural vs. Virtus Seix Government | Dreyfus Natural vs. Ab Municipal Bond | Dreyfus Natural vs. T Rowe Price | Dreyfus Natural vs. Lord Abbett Intermediate |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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