Correlation Between Franklin Federal and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Franklin Federal 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 Federal 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 Federal Limited Term and Emerging Markets Growth, you can compare the effects of market volatilities on Franklin Federal 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 Federal with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Emerging Markets.
Diversification Opportunities for Franklin Federal and Emerging Markets
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Emerging is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Emerging Markets Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Growth 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 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 Growth has no effect on the direction of Franklin Federal i.e., Franklin Federal and Emerging Markets go up and down completely randomly.
Pair Corralation between Franklin Federal and Emerging Markets
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.18 times more return on investment than Emerging Markets. However, Franklin Federal Limited Term is 5.6 times less risky than Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Emerging Markets Growth is currently generating about -0.14 per unit of risk. If you would invest 1,029 in Franklin Federal Limited Term on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Franklin Federal Limited Term or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Emerging Markets Growth
Performance |
| Timeline |
| Franklin Federal Lim |
| Emerging Markets Growth |
Franklin Federal and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Emerging Markets
The main advantage of trading using opposite Franklin Federal and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal 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 Federal vs. Eip Growth And | Franklin Federal vs. Kinetics Small Cap | Franklin Federal vs. Chase Growth Fund | Franklin Federal vs. T Rowe Price |
| Emerging Markets vs. Scharf Fund Retail | Emerging Markets vs. Calamos Global Equity | Emerging Markets vs. The Gabelli Equity | Emerging Markets vs. Locorr Dynamic Equity |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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