Correlation Between Franklin Emerging and Thornburg Limited
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Thornburg Limited 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 Thornburg Limited 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 Thornburg Limited Term, you can compare the effects of market volatilities on Franklin Emerging and Thornburg Limited 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 Thornburg Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Thornburg Limited.
Diversification Opportunities for Franklin Emerging and Thornburg Limited
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Thornburg is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Thornburg Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Limited Term 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 Thornburg Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Limited Term has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Thornburg Limited go up and down completely randomly.
Pair Corralation between Franklin Emerging and Thornburg Limited
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 1.06 times more return on investment than Thornburg Limited. However, Franklin Emerging is 1.06 times more volatile than Thornburg Limited Term. It trades about 0.14 of its potential returns per unit of risk. Thornburg Limited Term is currently generating about -0.05 per unit of risk. If you would invest 1,204 in Franklin Emerging Market on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Franklin Emerging Market or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Franklin Emerging Market vs. Thornburg Limited Term
Performance |
| Timeline |
| Franklin Emerging Market |
| Thornburg Limited Term |
Franklin Emerging and Thornburg Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Thornburg Limited
The main advantage of trading using opposite Franklin Emerging and Thornburg Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Thornburg Limited 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 Thornburg Limited will offset losses from the drop in Thornburg Limited's long position.| Franklin Emerging vs. Health Biotchnology Portfolio | Franklin Emerging vs. Deutsche Health And | Franklin Emerging vs. Baron Health Care | Franklin Emerging vs. Prudential Health Sciences |
| Thornburg Limited vs. Thornburg Value Fund | Thornburg Limited vs. Thornburg Value Fund | Thornburg Limited vs. Thornburg International Value | Thornburg Limited vs. Thornburg International Value |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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