Correlation Between Franklin Real and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Franklin Real 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 Real 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 Real Estate and Emerging Markets Fund, you can compare the effects of market volatilities on Franklin Real 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 Real with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Emerging Markets.
Diversification Opportunities for Franklin Real and Emerging Markets
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Emerging is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 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 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 Real i.e., Franklin Real and Emerging Markets go up and down completely randomly.
Pair Corralation between Franklin Real and Emerging Markets
Assuming the 90 days horizon Franklin Real Estate is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Real Estate is 1.17 times less risky than Emerging Markets. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Emerging Markets Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,627 in Emerging Markets Fund on September 12, 2024 and sell it today you would earn a total of 55.00 from holding Emerging Markets Fund or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Emerging Markets Fund
Performance |
| Timeline |
| Franklin Real Estate |
| Emerging Markets |
Franklin Real and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Emerging Markets
The main advantage of trading using opposite Franklin Real and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real 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 Real vs. Guggenheim Risk Managed | Franklin Real vs. HUMANA INC | Franklin Real vs. Barloworld Ltd ADR | Franklin Real vs. Morningstar Unconstrained Allocation |
| Emerging Markets vs. Ashmore Emerging Markets | Emerging Markets vs. Locorr Market Trend | Emerging Markets vs. T Rowe Price | Emerging Markets vs. Western Asset 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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