Correlation Between Franklin Emerging and Jpmorgan Equity
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Jpmorgan Equity 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 Jpmorgan Equity 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 Jpmorgan Equity Fund, you can compare the effects of market volatilities on Franklin Emerging and Jpmorgan Equity 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 Jpmorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Jpmorgan Equity.
Diversification Opportunities for Franklin Emerging and Jpmorgan Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Jpmorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Jpmorgan Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Equity 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 Jpmorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Equity has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Jpmorgan Equity go up and down completely randomly.
Pair Corralation between Franklin Emerging and Jpmorgan Equity
Assuming the 90 days horizon Franklin Emerging is expected to generate 1.77 times less return on investment than Jpmorgan Equity. But when comparing it to its historical volatility, Franklin Emerging Market is 3.22 times less risky than Jpmorgan Equity. It trades about 0.27 of its potential returns per unit of risk. Jpmorgan Equity Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,039 in Jpmorgan Equity Fund on September 14, 2024 and sell it today you would earn a total of 715.00 from holding Jpmorgan Equity Fund or generate 35.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Jpmorgan Equity Fund
Performance |
| Timeline |
| Franklin Emerging Market |
| Jpmorgan Equity |
Franklin Emerging and Jpmorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Jpmorgan Equity
The main advantage of trading using opposite Franklin Emerging and Jpmorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Jpmorgan Equity 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 Jpmorgan Equity will offset losses from the drop in Jpmorgan Equity's long position.| Franklin Emerging vs. Alger Health Sciences | Franklin Emerging vs. Highland Longshort Healthcare | Franklin Emerging vs. Baron Health Care | Franklin Emerging vs. Tekla Healthcare Opportunities |
| Jpmorgan Equity vs. Rbc Emerging Markets | Jpmorgan Equity vs. Nasdaq 100 2x Strategy | Jpmorgan Equity vs. Franklin Emerging Market | Jpmorgan Equity vs. Pace International Emerging |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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