Correlation Between Franklin Emerging and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Franklin Emerging and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Nasdaq 100.
Diversification Opportunities for Franklin Emerging and Nasdaq 100
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Nasdaq is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Franklin Emerging and Nasdaq 100
Assuming the 90 days horizon Franklin Emerging is expected to generate 4.19 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Franklin Emerging Market is 7.9 times less risky than Nasdaq 100. It trades about 0.19 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 21,074 in Nasdaq 100 2x Strategy on August 28, 2024 and sell it today you would earn a total of 36,346 from holding Nasdaq 100 2x Strategy or generate 172.47% 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. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Franklin Emerging Market |
| Nasdaq 100 2x |
Franklin Emerging and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Nasdaq 100
The main advantage of trading using opposite Franklin Emerging and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Franklin Emerging vs. Chartwell Short Duration | Franklin Emerging vs. Ultra Short Term Fixed | Franklin Emerging vs. Maryland Tax Free Bond | Franklin Emerging vs. Bbh Intermediate Municipal |
| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 2x Strategy |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |