Correlation Between Franklin Emerging and Growth Portfolio
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Growth Portfolio 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 Growth Portfolio 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 Growth Portfolio Class, you can compare the effects of market volatilities on Franklin Emerging and Growth Portfolio 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 Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Growth Portfolio.
Diversification Opportunities for Franklin Emerging and Growth Portfolio
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Growth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class 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 Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Growth Portfolio go up and down completely randomly.
Pair Corralation between Franklin Emerging and Growth Portfolio
Assuming the 90 days horizon Franklin Emerging is expected to generate 3.31 times less return on investment than Growth Portfolio. But when comparing it to its historical volatility, Franklin Emerging Market is 6.43 times less risky than Growth Portfolio. It trades about 0.24 of its potential returns per unit of risk. Growth Portfolio Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,334 in Growth Portfolio Class on September 12, 2024 and sell it today you would earn a total of 2,154 from holding Growth Portfolio Class or generate 92.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
Franklin Emerging Market vs. Growth Portfolio Class
Performance |
| Timeline |
| Franklin Emerging Market |
| Growth Portfolio Class |
Franklin Emerging and Growth Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Growth Portfolio
The main advantage of trading using opposite Franklin Emerging and Growth Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Growth Portfolio 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 Growth Portfolio will offset losses from the drop in Growth Portfolio's long position.| Franklin Emerging vs. Rbc Emerging Markets | Franklin Emerging vs. Origin Emerging Markets | Franklin Emerging vs. Siit Emerging Markets | Franklin Emerging vs. Locorr Market Trend |
| Growth Portfolio vs. Vy Jpmorgan Emerging | Growth Portfolio vs. Pace International Emerging | Growth Portfolio vs. Investec Emerging Markets | Growth Portfolio 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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