Correlation Between Franklin Emerging and Smi Dynamic
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Smi Dynamic 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 Smi Dynamic 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 Smi Dynamic Allocation, you can compare the effects of market volatilities on Franklin Emerging and Smi Dynamic 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 Smi Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Smi Dynamic.
Diversification Opportunities for Franklin Emerging and Smi Dynamic
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Smi is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Smi Dynamic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smi Dynamic Allocation 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 Smi Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smi Dynamic Allocation has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Smi Dynamic go up and down completely randomly.
Pair Corralation between Franklin Emerging and Smi Dynamic
Assuming the 90 days horizon Franklin Emerging is expected to generate 2.49 times less return on investment than Smi Dynamic. But when comparing it to its historical volatility, Franklin Emerging Market is 2.37 times less risky than Smi Dynamic. It trades about 0.15 of its potential returns per unit of risk. Smi Dynamic Allocation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,298 in Smi Dynamic Allocation on August 27, 2024 and sell it today you would earn a total of 24.00 from holding Smi Dynamic Allocation or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. Smi Dynamic Allocation
Performance |
| Timeline |
| Franklin Emerging Market |
| Smi Dynamic Allocation |
Franklin Emerging and Smi Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Smi Dynamic
The main advantage of trading using opposite Franklin Emerging and Smi Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Smi Dynamic 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 Smi Dynamic will offset losses from the drop in Smi Dynamic'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 |
| Smi Dynamic vs. Smi Servative Allocation | Smi Dynamic vs. Sound Mind Investing | Smi Dynamic vs. Franklin Emerging Market | Smi Dynamic vs. Vanguard Equity Income |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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