Correlation Between Franklin Emerging and Cref Inflation
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Cref Inflation 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 Cref Inflation 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 Cref Inflation Linked Bond, you can compare the effects of market volatilities on Franklin Emerging and Cref Inflation 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 Cref Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Cref Inflation.
Diversification Opportunities for Franklin Emerging and Cref Inflation
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Cref is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked 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 Cref Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Cref Inflation go up and down completely randomly.
Pair Corralation between Franklin Emerging and Cref Inflation
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 1.42 times more return on investment than Cref Inflation. However, Franklin Emerging is 1.42 times more volatile than Cref Inflation Linked Bond. It trades about 0.22 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.25 per unit of risk. If you would invest 1,208 in Franklin Emerging Market on September 14, 2024 and sell it today you would earn a total of 11.00 from holding Franklin Emerging Market or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Emerging Market vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Franklin Emerging Market |
| Cref Inflation Linked |
Franklin Emerging and Cref Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Cref Inflation
The main advantage of trading using opposite Franklin Emerging and Cref Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Cref Inflation 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 Cref Inflation will offset losses from the drop in Cref Inflation's long position.| Franklin Emerging vs. Alger Health Sciences | Franklin Emerging vs. Highland Longshort Healthcare | Franklin Emerging vs. Baron Health Care | Franklin Emerging vs. Tekla Healthcare Opportunities |
| Cref Inflation vs. Nasdaq 100 2x Strategy | Cref Inflation vs. Black Oak Emerging | Cref Inflation vs. Ashmore Emerging Markets | Cref Inflation 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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