Correlation Between Franklin Federal and Calvert Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Calvert 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 Federal and Calvert Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Calvert Emerging Markets, you can compare the effects of market volatilities on Franklin Federal and Calvert 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 Federal with a short position of Calvert Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Calvert Emerging.
Diversification Opportunities for Franklin Federal and Calvert Emerging
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Calvert is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Franklin Federal 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 Federal Limited Term are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Franklin Federal i.e., Franklin Federal and Calvert Emerging go up and down completely randomly.
Pair Corralation between Franklin Federal and Calvert Emerging
Assuming the 90 days horizon Franklin Federal is expected to generate 3.28 times less return on investment than Calvert Emerging. But when comparing it to its historical volatility, Franklin Federal Limited Term is 7.75 times less risky than Calvert Emerging. It trades about 0.14 of its potential returns per unit of risk. Calvert Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Calvert Emerging Markets on August 31, 2024 and sell it today you would earn a total of 194.00 from holding Calvert Emerging Markets or generate 19.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.36% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Calvert Emerging Markets
Performance |
| Timeline |
| Franklin Federal Lim |
| Calvert Emerging Markets |
Franklin Federal and Calvert Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Calvert Emerging
The main advantage of trading using opposite Franklin Federal and Calvert Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Calvert 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 Calvert Emerging will offset losses from the drop in Calvert Emerging's long position.| Franklin Federal vs. Pro Blend Moderate Term | Franklin Federal vs. Wisdomtree Siegel Moderate | Franklin Federal vs. Blackrock Moderate Prepared | Franklin Federal vs. Lifestyle Ii Moderate |
| Calvert Emerging vs. Goldman Sachs Short Term | Calvert Emerging vs. Vanguard Institutional Short Term | Calvert Emerging vs. Franklin Federal Limited Term | Calvert Emerging vs. Sterling Capital Short |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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