Correlation Between Franklin Emerging and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Touchstone Large 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 Touchstone Large 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 Touchstone Large Cap, you can compare the effects of market volatilities on Franklin Emerging and Touchstone Large 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 Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Touchstone Large.
Diversification Opportunities for Franklin Emerging and Touchstone Large
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FRANKLIN and Touchstone is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Touchstone Large go up and down completely randomly.
Pair Corralation between Franklin Emerging and Touchstone Large
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.3 times more return on investment than Touchstone Large. However, Franklin Emerging Market is 3.34 times less risky than Touchstone Large. It trades about 0.13 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about -0.19 per unit of risk. If you would invest 1,161 in Franklin Emerging Market on October 28, 2024 and sell it today you would earn a total of 13.00 from holding Franklin Emerging Market or generate 1.12% 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. Touchstone Large Cap
Performance |
| Timeline |
| Franklin Emerging Market |
| Touchstone Large Cap |
Franklin Emerging and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Touchstone Large
The main advantage of trading using opposite Franklin Emerging and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Touchstone Large 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 Touchstone Large will offset losses from the drop in Touchstone Large's long position.| Franklin Emerging vs. Siit High Yield | Franklin Emerging vs. Fidelity Capital Income | Franklin Emerging vs. Dunham High Yield | Franklin Emerging vs. Voya High Yield |
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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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