Correlation Between Franklin Emerging and Hodges Blue
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Hodges Blue 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 Hodges Blue 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 Hodges Blue Chip, you can compare the effects of market volatilities on Franklin Emerging and Hodges Blue 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 Hodges Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Hodges Blue.
Diversification Opportunities for Franklin Emerging and Hodges Blue
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Hodges is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Hodges Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Blue Chip 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 Hodges Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Blue Chip has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Hodges Blue go up and down completely randomly.
Pair Corralation between Franklin Emerging and Hodges Blue
Assuming the 90 days horizon Franklin Emerging is expected to generate 1.71 times less return on investment than Hodges Blue. But when comparing it to its historical volatility, Franklin Emerging Market is 2.69 times less risky than Hodges Blue. It trades about 0.23 of its potential returns per unit of risk. Hodges Blue Chip is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,844 in Hodges Blue Chip on August 31, 2024 and sell it today you would earn a total of 922.00 from holding Hodges Blue Chip or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Franklin Emerging Market vs. Hodges Blue Chip
Performance |
| Timeline |
| Franklin Emerging Market |
| Hodges Blue Chip |
Franklin Emerging and Hodges Blue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Hodges Blue
The main advantage of trading using opposite Franklin Emerging and Hodges Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Hodges Blue 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 Hodges Blue will offset losses from the drop in Hodges Blue's long position.| Franklin Emerging vs. T Rowe Price | Franklin Emerging vs. Morningstar Unconstrained Allocation | Franklin Emerging vs. Goldman Sachs Large | Franklin Emerging vs. Federated Kaufmann Large |
| Hodges Blue vs. Aquagold International | Hodges Blue vs. Morningstar Unconstrained Allocation | Hodges Blue vs. Thrivent High Yield | Hodges Blue vs. Via Renewables |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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