Correlation Between Franklin Emerging and Franklin High
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Franklin High 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 Franklin High 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 Franklin High Yield, you can compare the effects of market volatilities on Franklin Emerging and Franklin High 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 Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Franklin High.
Diversification Opportunities for Franklin Emerging and Franklin High
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Franklin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield 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 Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Franklin High go up and down completely randomly.
Pair Corralation between Franklin Emerging and Franklin High
Assuming the 90 days horizon Franklin Emerging is expected to generate 1.7 times less return on investment than Franklin High. But when comparing it to its historical volatility, Franklin Emerging Market is 1.6 times less risky than Franklin High. It trades about 0.18 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 899.00 in Franklin High Yield on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Franklin High Yield or generate 1.56% 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. Franklin High Yield
Performance |
| Timeline |
| Franklin Emerging Market |
| Franklin High Yield |
Franklin Emerging and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Franklin High
The main advantage of trading using opposite Franklin Emerging and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Franklin High 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 Franklin High will offset losses from the drop in Franklin High's long position.| Franklin Emerging vs. Chartwell Short Duration | Franklin Emerging vs. Ultra Short Term Fixed | Franklin Emerging vs. Maryland Tax Free Bond | Franklin Emerging vs. Bbh Intermediate Municipal |
| Franklin High vs. Dunham Real Estate | Franklin High vs. Great West Real Estate | Franklin High vs. Amg Managers Centersquare | Franklin High vs. Neuberger Berman Real |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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