Correlation Between Franklin Emerging and Multi Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Multi Asset 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 Multi Asset 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 Multi Asset Growth Strategy, you can compare the effects of market volatilities on Franklin Emerging and Multi Asset 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 Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Multi Asset.
Diversification Opportunities for Franklin Emerging and Multi Asset
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Multi is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Multi Asset Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Asset Growth 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 Multi Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Asset Growth has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Multi Asset go up and down completely randomly.
Pair Corralation between Franklin Emerging and Multi Asset
Assuming the 90 days horizon Franklin Emerging is expected to generate 3.6 times less return on investment than Multi Asset. But when comparing it to its historical volatility, Franklin Emerging Market is 1.44 times less risky than Multi Asset. It trades about 0.08 of its potential returns per unit of risk. Multi Asset Growth Strategy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,081 in Multi Asset Growth Strategy on September 15, 2024 and sell it today you would earn a total of 13.00 from holding Multi Asset Growth Strategy or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Multi Asset Growth Strategy
Performance |
| Timeline |
| Franklin Emerging Market |
| Multi Asset Growth |
Franklin Emerging and Multi Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Multi Asset
The main advantage of trading using opposite Franklin Emerging and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Multi Asset 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 Multi Asset will offset losses from the drop in Multi Asset'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 |
| Multi Asset vs. International Developed Markets | Multi Asset vs. Global Real Estate | Multi Asset vs. Global Real Estate | Multi Asset vs. Global Real Estate |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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