Correlation Between Franklin Emerging and Vanguard Long-term
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Vanguard Long-term 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 Vanguard Long-term 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 Vanguard Long Term Bond, you can compare the effects of market volatilities on Franklin Emerging and Vanguard Long-term 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 Vanguard Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Vanguard Long-term.
Diversification Opportunities for Franklin Emerging and Vanguard Long-term
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Vanguard is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Vanguard Long Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term 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 Vanguard Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Vanguard Long-term go up and down completely randomly.
Pair Corralation between Franklin Emerging and Vanguard Long-term
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.35 times more return on investment than Vanguard Long-term. However, Franklin Emerging Market is 2.83 times less risky than Vanguard Long-term. It trades about 0.17 of its potential returns per unit of risk. Vanguard Long Term Bond is currently generating about 0.0 per unit of risk. If you would invest 918.00 in Franklin Emerging Market on November 2, 2024 and sell it today you would earn a total of 256.00 from holding Franklin Emerging Market or generate 27.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Emerging Market vs. Vanguard Long Term Bond
Performance |
| Timeline |
| Franklin Emerging Market |
| Vanguard Long Term |
Franklin Emerging and Vanguard Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Vanguard Long-term
The main advantage of trading using opposite Franklin Emerging and Vanguard Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Vanguard Long-term 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 Vanguard Long-term will offset losses from the drop in Vanguard Long-term's long position.| Franklin Emerging vs. Lind Capital Partners | Franklin Emerging vs. Old Westbury California | Franklin Emerging vs. California Municipal Portfolio | Franklin Emerging vs. Oklahoma Municipal Fund |
| Vanguard Long-term vs. Morgan Stanley Emerging | Vanguard Long-term vs. Ashmore Emerging Markets | Vanguard Long-term vs. Artisan Developing World | Vanguard Long-term vs. Vy Jpmorgan Emerging |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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