Correlation Between Franklin Emerging and Catalystmillburn
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Catalystmillburn 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 Catalystmillburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Franklin Emerging and Catalystmillburn 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 Catalystmillburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Catalystmillburn.
Diversification Opportunities for Franklin Emerging and Catalystmillburn
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Catalystmillburn is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Catalystmillburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Catalystmillburn go up and down completely randomly.
Pair Corralation between Franklin Emerging and Catalystmillburn
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.26 times more return on investment than Catalystmillburn. However, Franklin Emerging Market is 3.84 times less risky than Catalystmillburn. It trades about 0.08 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about -0.15 per unit of risk. If you would invest 1,212 in Franklin Emerging Market on September 15, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Emerging Market or generate 0.33% 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. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Franklin Emerging Market |
| Catalystmillburn Hedge |
Franklin Emerging and Catalystmillburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Catalystmillburn
The main advantage of trading using opposite Franklin Emerging and Catalystmillburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Catalystmillburn 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 Catalystmillburn will offset losses from the drop in Catalystmillburn'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 |
| Catalystmillburn vs. Pace International Emerging | Catalystmillburn vs. Origin Emerging Markets | Catalystmillburn vs. Shelton Emerging Markets | Catalystmillburn vs. Franklin Emerging Market |
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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