Correlation Between Franklin Emerging and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Highland Long/short 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 Highland Long/short 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 Highland Longshort Healthcare, you can compare the effects of market volatilities on Franklin Emerging and Highland Long/short 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 Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Highland Long/short.
Diversification Opportunities for Franklin Emerging and Highland Long/short
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Highland is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Long/short 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 Highland Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Long/short has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Highland Long/short go up and down completely randomly.
Pair Corralation between Franklin Emerging and Highland Long/short
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 1.1 times more return on investment than Highland Long/short. However, Franklin Emerging is 1.1 times more volatile than Highland Longshort Healthcare. It trades about 0.14 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.09 per unit of risk. If you would invest 1,204 in Franklin Emerging Market on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Franklin Emerging Market or generate 0.75% 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. Highland Longshort Healthcare
Performance |
| Timeline |
| Franklin Emerging Market |
| Highland Long/short |
Franklin Emerging and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Highland Long/short
The main advantage of trading using opposite Franklin Emerging and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Highland Long/short 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 Highland Long/short will offset losses from the drop in Highland Long/short's long position.| Franklin Emerging vs. Franklin Mutual Beacon | Franklin Emerging vs. Templeton Developing Markets | Franklin Emerging vs. Franklin Mutual Global | Franklin Emerging vs. Franklin Mutual Global |
| Highland Long/short vs. Dreyfus Natural Resources | Highland Long/short vs. Fidelity Advisor Energy | Highland Long/short vs. Short Oil Gas | Highland Long/short vs. Clearbridge Energy Mlp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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