Correlation Between Franklin Income and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Franklin Income and Emerging Markets 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 Income and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Income Fund and The Emerging Markets, you can compare the effects of market volatilities on Franklin Income and Emerging Markets 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 Income with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Income and Emerging Markets.
Diversification Opportunities for Franklin Income and Emerging Markets
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Emerging is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Income Fund and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Franklin Income 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 Income Fund are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Franklin Income i.e., Franklin Income and Emerging Markets go up and down completely randomly.
Pair Corralation between Franklin Income and Emerging Markets
Assuming the 90 days horizon Franklin Income Fund is expected to generate 0.35 times more return on investment than Emerging Markets. However, Franklin Income Fund is 2.84 times less risky than Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 236.00 in Franklin Income Fund on December 4, 2024 and sell it today you would earn a total of 4.00 from holding Franklin Income Fund or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Income Fund vs. The Emerging Markets
Performance |
| Timeline |
| Franklin Income |
| Emerging Markets |
Franklin Income and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Income and Emerging Markets
The main advantage of trading using opposite Franklin Income and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Income position performs unexpectedly, Emerging Markets 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 Markets will offset losses from the drop in Emerging Markets' long position.| Franklin Income vs. Fidelity Advisor Diversified | Franklin Income vs. Harbor Diversified International | Franklin Income vs. American Century Diversified | Franklin Income vs. Aqr Diversified Arbitrage |
| Emerging Markets vs. L Abbett Growth | Emerging Markets vs. Templeton Growth Fund | Emerging Markets vs. Rational Defensive Growth | Emerging Markets vs. T Rowe Price |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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