Correlation Between Franklin Emerging and First Investors
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and First Investors 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 First Investors 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 First Investors Growth, you can compare the effects of market volatilities on Franklin Emerging and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and First Investors.
Diversification Opportunities for Franklin Emerging and First Investors
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and First Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Growth 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Growth has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and First Investors go up and down completely randomly.
Pair Corralation between Franklin Emerging and First Investors
Assuming the 90 days horizon Franklin Emerging is expected to generate 2.64 times less return on investment than First Investors. But when comparing it to its historical volatility, Franklin Emerging Market is 3.82 times less risky than First Investors. It trades about 0.27 of its potential returns per unit of risk. First Investors Growth is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,569 in First Investors Growth on September 3, 2024 and sell it today you would earn a total of 146.00 from holding First Investors Growth or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. First Investors Growth
Performance |
| Timeline |
| Franklin Emerging Market |
| First Investors Growth |
Franklin Emerging and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and First Investors
The main advantage of trading using opposite Franklin Emerging and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Franklin Emerging vs. Iaadx | Franklin Emerging vs. Sei Daily Income | Franklin Emerging vs. Fa 529 Aggressive | Franklin Emerging vs. Arrow Managed Futures |
| First Investors vs. Ab Bond Inflation | First Investors vs. T Rowe Price | First Investors vs. Cref Inflation Linked Bond | First Investors vs. American Funds Inflation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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