Correlation Between Franklin Emerging and Inverse Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Inverse Emerging 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 Inverse Emerging 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 Inverse Emerging Markets, you can compare the effects of market volatilities on Franklin Emerging and Inverse Emerging 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 Inverse Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Inverse Emerging.
Diversification Opportunities for Franklin Emerging and Inverse Emerging
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Inverse is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Inverse Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Emerging Markets 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 Inverse Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Emerging Markets has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Inverse Emerging go up and down completely randomly.
Pair Corralation between Franklin Emerging and Inverse Emerging
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.11 times more return on investment than Inverse Emerging. However, Franklin Emerging Market is 9.22 times less risky than Inverse Emerging. It trades about 0.19 of its potential returns per unit of risk. Inverse Emerging Markets is currently generating about -0.03 per unit of risk. If you would invest 1,153 in Franklin Emerging Market on October 20, 2024 and sell it today you would earn a total of 9.00 from holding Franklin Emerging Market or generate 0.78% 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. Inverse Emerging Markets
Performance |
| Timeline |
| Franklin Emerging Market |
| Inverse Emerging Markets |
Franklin Emerging and Inverse Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Inverse Emerging
The main advantage of trading using opposite Franklin Emerging and Inverse Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Inverse Emerging 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 Inverse Emerging will offset losses from the drop in Inverse Emerging's long position.| Franklin Emerging vs. Allianzgi Health Sciences | Franklin Emerging vs. Delaware Healthcare Fund | Franklin Emerging vs. The Hartford Healthcare | Franklin Emerging vs. Deutsche Health And |
| Inverse Emerging vs. Tax Managed Large Cap | Inverse Emerging vs. Profunds Large Cap Growth | Inverse Emerging vs. Vest Large Cap | Inverse Emerging vs. Qs Large Cap |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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