Correlation Between Franklin Emerging and Western Asset
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Western Asset 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 Western Asset 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 Western Asset Total, you can compare the effects of market volatilities on Franklin Emerging and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Western Asset.
Diversification Opportunities for Franklin Emerging and Western Asset
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Western is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Total has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Western Asset go up and down completely randomly.
Pair Corralation between Franklin Emerging and Western Asset
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 1.21 times more return on investment than Western Asset. However, Franklin Emerging is 1.21 times more volatile than Western Asset Total. It trades about 0.11 of its potential returns per unit of risk. Western Asset Total is currently generating about 0.04 per unit of risk. If you would invest 968.00 in Franklin Emerging Market on October 12, 2024 and sell it today you would earn a total of 191.00 from holding Franklin Emerging Market or generate 19.73% 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. Western Asset Total
Performance |
| Timeline |
| Franklin Emerging Market |
| Western Asset Total |
Franklin Emerging and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Western Asset
The main advantage of trading using opposite Franklin Emerging and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Franklin Emerging vs. Profunds Large Cap Growth | Franklin Emerging vs. Americafirst Large Cap | Franklin Emerging vs. M Large Cap | Franklin Emerging vs. Qs Large Cap |
| Western Asset vs. Franklin Emerging Market | Western Asset vs. Oshaughnessy Market Leaders | Western Asset vs. Dws Emerging Markets | Western Asset vs. Origin Emerging Markets |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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