Correlation Between Franklin Emerging and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Franklin Strategic 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 Strategic 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 Strategic Mortgage, you can compare the effects of market volatilities on Franklin Emerging and Franklin Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Franklin Strategic.
Diversification Opportunities for Franklin Emerging and Franklin Strategic
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Franklin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Franklin Strategic Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Franklin Strategic go up and down completely randomly.
Pair Corralation between Franklin Emerging and Franklin Strategic
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.58 times more return on investment than Franklin Strategic. However, Franklin Emerging Market is 1.73 times less risky than Franklin Strategic. It trades about 0.35 of its potential returns per unit of risk. Franklin Strategic Mortgage is currently generating about 0.06 per unit of risk. If you would invest 1,161 in Franklin Emerging Market on November 5, 2024 and sell it today you would earn a total of 16.00 from holding Franklin Emerging Market or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Franklin Strategic Mortgage
Performance |
| Timeline |
| Franklin Emerging Market |
| Franklin Strategic |
Franklin Emerging and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Franklin Strategic
The main advantage of trading using opposite Franklin Emerging and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic's long position.| Franklin Emerging vs. Kinetics Global Fund | Franklin Emerging vs. Alliancebernstein Global Highome | Franklin Emerging vs. Commonwealth Global Fund | Franklin Emerging vs. Rbc Global Equity |
| Franklin Strategic vs. Avantis Large Cap | Franklin Strategic vs. Americafirst Large Cap | Franklin Strategic vs. Blackrock Large Cap | Franklin Strategic vs. Virtus Nfj Large Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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