Correlation Between Franklin High and Emerging Europe
Can any of the company-specific risk be diversified away by investing in both Franklin High and Emerging Europe 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 High and Emerging Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Emerging Europe Fund, you can compare the effects of market volatilities on Franklin High and Emerging Europe 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 High with a short position of Emerging Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Emerging Europe.
Diversification Opportunities for Franklin High and Emerging Europe
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Emerging is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Emerging Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Europe and Franklin High 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 High Yield are associated (or correlated) with Emerging Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Europe has no effect on the direction of Franklin High i.e., Franklin High and Emerging Europe go up and down completely randomly.
Pair Corralation between Franklin High and Emerging Europe
Assuming the 90 days horizon Franklin High is expected to generate 3.63 times less return on investment than Emerging Europe. But when comparing it to its historical volatility, Franklin High Yield is 3.67 times less risky than Emerging Europe. It trades about 0.08 of its potential returns per unit of risk. Emerging Europe Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 355.00 in Emerging Europe Fund on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Emerging Europe Fund or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.31% |
| Values | Daily Returns |
Franklin High Yield vs. Emerging Europe Fund
Performance |
| Timeline |
| Franklin High Yield |
| Emerging Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Franklin High and Emerging Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Emerging Europe
The main advantage of trading using opposite Franklin High and Emerging Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Emerging Europe 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 Emerging Europe will offset losses from the drop in Emerging Europe's long position.| Franklin High vs. Pgim Jennison Technology | Franklin High vs. Allianzgi Technology Fund | Franklin High vs. Hennessy Technology Fund | Franklin High vs. Invesco Technology Fund |
| Emerging Europe vs. Harbor Diversified International | Emerging Europe vs. Adams Diversified Equity | Emerging Europe vs. Guggenheim Diversified Income | Emerging Europe vs. Lord Abbett Diversified |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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