Correlation Between Franklin and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin and Prudential 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 and Prudential Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Government Money and Prudential Emerging Markets, you can compare the effects of market volatilities on Franklin and Prudential 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 with a short position of Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Prudential Emerging.
Diversification Opportunities for Franklin and Prudential Emerging
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franklin and Prudential is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging and Franklin 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 Government Money are associated (or correlated) with Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Franklin i.e., Franklin and Prudential Emerging go up and down completely randomly.
Pair Corralation between Franklin and Prudential Emerging
Assuming the 90 days horizon Franklin Government Money is expected to generate 0.32 times more return on investment than Prudential Emerging. However, Franklin Government Money is 3.15 times less risky than Prudential Emerging. It trades about 0.13 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 97.00 in Franklin Government Money on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Franklin Government Money or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Prudential Emerging Markets
Performance |
| Timeline |
| Franklin Government Money |
| Prudential Emerging |
Franklin and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Prudential Emerging
The main advantage of trading using opposite Franklin and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Prudential 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 Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.| Franklin vs. Vanguard Total Stock | Franklin vs. Vanguard 500 Index | Franklin vs. Vanguard Total Stock | Franklin vs. Vanguard Total Stock |
| Prudential Emerging vs. Blackrock Funds Iii | Prudential Emerging vs. Massmutual Premier Funds | Prudential Emerging vs. Franklin Government Money | Prudential Emerging vs. Morgan Stanley Government |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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