Correlation Between Franklin Real and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Gmo Emerging 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 Real and Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Real Estate and Gmo Emerging Markets, you can compare the effects of market volatilities on Franklin Real and Gmo Emerging 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 Real with a short position of Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Gmo Emerging.
Diversification Opportunities for Franklin Real and Gmo Emerging
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FRANKLIN and Gmo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets and Franklin Real 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 Real Estate are associated (or correlated) with Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Franklin Real i.e., Franklin Real and Gmo Emerging go up and down completely randomly.
Pair Corralation between Franklin Real and Gmo Emerging
Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.18 times more return on investment than Gmo Emerging. However, Franklin Real is 1.18 times more volatile than Gmo Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 1,685 in Franklin Real Estate on September 4, 2024 and sell it today you would earn a total of 274.00 from holding Franklin Real Estate or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Gmo Emerging Markets
Performance |
| Timeline |
| Franklin Real Estate |
| Gmo Emerging Markets |
Franklin Real and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Gmo Emerging
The main advantage of trading using opposite Franklin Real and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Franklin Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| Gmo Emerging vs. Gmo E Plus | Gmo Emerging vs. Gmo Trust | Gmo Emerging vs. Gmo Small Cap | Gmo Emerging vs. Gmo International Opportunistic |
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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