Correlation Between Franklin Emerging and Icon Natural
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Icon Natural 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 Icon Natural 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 Icon Natural Resources, you can compare the effects of market volatilities on Franklin Emerging and Icon Natural 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 Icon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Icon Natural.
Diversification Opportunities for Franklin Emerging and Icon Natural
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Icon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources 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 Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Icon Natural go up and down completely randomly.
Pair Corralation between Franklin Emerging and Icon Natural
Assuming the 90 days horizon Franklin Emerging is expected to generate 1.33 times less return on investment than Icon Natural. But when comparing it to its historical volatility, Franklin Emerging Market is 4.68 times less risky than Icon Natural. It trades about 0.25 of its potential returns per unit of risk. Icon Natural Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,566 in Icon Natural Resources on September 2, 2024 and sell it today you would earn a total of 318.00 from holding Icon Natural Resources or generate 20.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Icon Natural Resources
Performance |
| Timeline |
| Franklin Emerging Market |
| Icon Natural Resources |
Franklin Emerging and Icon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Icon Natural
The main advantage of trading using opposite Franklin Emerging and Icon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Icon Natural 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 Icon Natural will offset losses from the drop in Icon Natural's long position.| Franklin Emerging vs. Delaware Limited Term Diversified | Franklin Emerging vs. The Gabelli Small | Franklin Emerging vs. Harbor Diversified International | Franklin Emerging vs. Western Asset Diversified |
| Icon Natural vs. Vanguard Growth And | Icon Natural vs. Small Pany Growth | Icon Natural vs. Tfa Alphagen Growth | Icon Natural vs. L Abbett Growth |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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