Correlation Between Franklin Emerging and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Franklin Growth 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 Growth 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 Growth Fund, you can compare the effects of market volatilities on Franklin Emerging and Franklin Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Franklin Growth.
Diversification Opportunities for Franklin Emerging and Franklin Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin 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 Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Franklin Growth go up and down completely randomly.
Pair Corralation between Franklin Emerging and Franklin Growth
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.49 times more return on investment than Franklin Growth. However, Franklin Emerging Market is 2.03 times less risky than Franklin Growth. It trades about -0.28 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about -0.29 per unit of risk. If you would invest 1,227 in Franklin Emerging Market on October 10, 2024 and sell it today you would lose (66.00) from holding Franklin Emerging Market or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Franklin Growth Fund
Performance |
| Timeline |
| Franklin Emerging Market |
| Franklin Growth |
Franklin Emerging and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Franklin Growth
The main advantage of trading using opposite Franklin Emerging and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Franklin Emerging vs. Ab Bond Inflation | Franklin Emerging vs. Cref Inflation Linked Bond | Franklin Emerging vs. Aqr Managed Futures | Franklin Emerging vs. Arrow Managed Futures |
| Franklin Growth vs. Franklin Mutual Beacon | Franklin Growth vs. Templeton Developing Markets | Franklin Growth vs. Franklin Mutual Global | Franklin Growth vs. Franklin Mutual Global |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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