Correlation Between Franklin Government and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Government and Jpmorgan 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 Government and Jpmorgan 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 Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Franklin Government and Jpmorgan 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 Government with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Government and Jpmorgan Emerging.
Diversification Opportunities for Franklin Government and Jpmorgan Emerging
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Jpmorgan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets and Franklin Government 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 Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Franklin Government i.e., Franklin Government and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Franklin Government and Jpmorgan Emerging
Assuming the 90 days horizon Franklin Government is expected to generate 3.37 times less return on investment than Jpmorgan Emerging. But when comparing it to its historical volatility, Franklin Government Money is 6.89 times less risky than Jpmorgan Emerging. It trades about 0.13 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,475 in Jpmorgan Emerging Markets on September 3, 2024 and sell it today you would earn a total of 202.00 from holding Jpmorgan Emerging Markets or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| Franklin Government Money |
| Jpmorgan Emerging Markets |
Franklin Government and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Government and Jpmorgan Emerging
The main advantage of trading using opposite Franklin Government and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Government position performs unexpectedly, Jpmorgan 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 Jpmorgan Emerging will offset losses from the drop in Jpmorgan Emerging's long position.| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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