Correlation Between Franklin Emerging and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Franklin Emerging and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Metropolitan West.
Diversification Opportunities for Franklin Emerging and Metropolitan West
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Metropolitan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Metropolitan West go up and down completely randomly.
Pair Corralation between Franklin Emerging and Metropolitan West
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.61 times more return on investment than Metropolitan West. However, Franklin Emerging Market is 1.64 times less risky than Metropolitan West. It trades about 0.26 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.02 per unit of risk. If you would invest 1,152 in Franklin Emerging Market on October 22, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Emerging Market or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Metropolitan West Total
Performance |
| Timeline |
| Franklin Emerging Market |
| Metropolitan West Total |
Franklin Emerging and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Metropolitan West
The main advantage of trading using opposite Franklin Emerging and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Franklin Emerging vs. Angel Oak Multi Strategy | Franklin Emerging vs. Alphacentric Symmetry Strategy | Franklin Emerging vs. Artisan Developing World | Franklin Emerging vs. Inverse Nasdaq 100 Strategy |
| Metropolitan West vs. Virtus Multi Strategy Target | Metropolitan West vs. Franklin Emerging Market | Metropolitan West vs. Western Assets Emerging | Metropolitan West vs. Vanguard 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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