Correlation Between Franklin Emerging and William Blair
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and William Blair 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 William Blair 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 William Blair Small, you can compare the effects of market volatilities on Franklin Emerging and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and William Blair.
Diversification Opportunities for Franklin Emerging and William Blair
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and William is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and William Blair Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and William Blair go up and down completely randomly.
Pair Corralation between Franklin Emerging and William Blair
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.62 times more return on investment than William Blair. However, Franklin Emerging Market is 1.61 times less risky than William Blair. It trades about -0.15 of its potential returns per unit of risk. William Blair Small is currently generating about -0.25 per unit of risk. If you would invest 1,212 in Franklin Emerging Market on October 11, 2024 and sell it today you would lose (53.00) from holding Franklin Emerging Market or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. William Blair Small
Performance |
| Timeline |
| Franklin Emerging Market |
| William Blair Small |
Franklin Emerging and William Blair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and William Blair
The main advantage of trading using opposite Franklin Emerging and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair's long position.| Franklin Emerging vs. Gurtin California Muni | Franklin Emerging vs. Blrc Sgy Mnp | Franklin Emerging vs. Lord Abbett Intermediate | Franklin Emerging vs. Fidelity California Municipal |
| William Blair vs. Tiaa Cref Real Estate | William Blair vs. Prudential Real Estate | William Blair vs. Rems Real Estate | William Blair vs. Fidelity Real Estate |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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