Correlation Between Franklin Emerging and Large Cap
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Large Cap 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 Large Cap 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 Large Cap Growth Profund, you can compare the effects of market volatilities on Franklin Emerging and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Large Cap.
Diversification Opportunities for Franklin Emerging and Large Cap
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Large is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Large Cap go up and down completely randomly.
Pair Corralation between Franklin Emerging and Large Cap
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.15 times more return on investment than Large Cap. However, Franklin Emerging Market is 6.53 times less risky than Large Cap. It trades about -0.15 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about -0.17 per unit of risk. If you would invest 1,161 in Franklin Emerging Market on October 17, 2024 and sell it today you would lose (7.00) from holding Franklin Emerging Market or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Large Cap Growth Profund
Performance |
| Timeline |
| Franklin Emerging Market |
| Large Cap Growth |
Franklin Emerging and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Large Cap
The main advantage of trading using opposite Franklin Emerging and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Franklin Emerging vs. Rbb Fund Trust | Franklin Emerging vs. Alliancebernstein Global Highome | Franklin Emerging vs. Transamerica Asset Allocation | Franklin Emerging vs. Tax Managed Large Cap |
| Large Cap vs. Catalystmillburn Hedge Strategy | Large Cap vs. Dow 2x Strategy | Large Cap vs. Franklin Emerging Market | Large Cap vs. Ashmore Emerging Markets |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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