Correlation Between Franklin Growth and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Franklin Growth 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 Growth 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 Growth Opportunities and Emerging Markets Equity, you can compare the effects of market volatilities on Franklin Growth 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 Growth with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Growth and Emerging Markets.
Diversification Opportunities for Franklin Growth and Emerging Markets
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Emerging is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Growth Opportunities and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Franklin Growth 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 Growth Opportunities 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 Equity has no effect on the direction of Franklin Growth i.e., Franklin Growth and Emerging Markets go up and down completely randomly.
Pair Corralation between Franklin Growth and Emerging Markets
Assuming the 90 days horizon Franklin Growth Opportunities is expected to generate 1.42 times more return on investment than Emerging Markets. However, Franklin Growth is 1.42 times more volatile than Emerging Markets Equity. It trades about 0.07 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about -0.07 per unit of risk. If you would invest 6,372 in Franklin Growth Opportunities on September 13, 2024 and sell it today you would earn a total of 80.00 from holding Franklin Growth Opportunities or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Growth Opportunities vs. Emerging Markets Equity
Performance |
| Timeline |
| Franklin Growth Oppo |
| Emerging Markets Equity |
Franklin Growth and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Growth and Emerging Markets
The main advantage of trading using opposite Franklin Growth and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Growth 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 Growth vs. Gmo High Yield | Franklin Growth vs. Pax High Yield | Franklin Growth vs. Fidelity Capital Income | Franklin Growth vs. Jpmorgan High Yield |
| Emerging Markets vs. Smallcap Growth Fund | Emerging Markets vs. L Abbett Growth | Emerging Markets vs. Franklin Growth Opportunities | Emerging Markets vs. Praxis Growth Index |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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