Correlation Between Franklin and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin and Ashmore 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 Ashmore 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 Ashmore Emerging Markets, you can compare the effects of market volatilities on Franklin and Ashmore 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin and Ashmore Emerging.
Diversification Opportunities for Franklin and Ashmore Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Ashmore is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Government Money and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Franklin i.e., Franklin and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Franklin and Ashmore Emerging
Assuming the 90 days horizon Franklin is expected to generate 1.48 times less return on investment than Ashmore Emerging. In addition to that, Franklin is 1.2 times more volatile than Ashmore Emerging Markets. It trades about 0.13 of its total potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.22 per unit of volatility. If you would invest 855.00 in Ashmore Emerging Markets on September 2, 2024 and sell it today you would earn a total of 26.00 from holding Ashmore Emerging Markets or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Government Money vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Franklin Government Money |
| Ashmore Emerging Markets |
Franklin and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin and Ashmore Emerging
The main advantage of trading using opposite Franklin and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Franklin vs. Vanguard Total Stock | Franklin vs. Vanguard 500 Index | Franklin vs. Vanguard Total Stock | Franklin vs. Vanguard Total Stock |
| Ashmore Emerging vs. Qs Large Cap | Ashmore Emerging vs. M Large Cap | Ashmore Emerging vs. Fidelity Series 1000 | Ashmore Emerging vs. Qs Large Cap |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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