Correlation Between Gmo Emerging and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Franklin Mutual 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 Gmo Emerging and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Emerging Markets and Franklin Mutual Global, you can compare the effects of market volatilities on Gmo Emerging and Franklin Mutual 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 Gmo Emerging with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Franklin Mutual.
Diversification Opportunities for Gmo Emerging and Franklin Mutual
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Franklin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global and Gmo Emerging 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 Gmo Emerging Markets are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Franklin Mutual go up and down completely randomly.
Pair Corralation between Gmo Emerging and Franklin Mutual
Assuming the 90 days horizon Gmo Emerging Markets is expected to generate 1.03 times more return on investment than Franklin Mutual. However, Gmo Emerging is 1.03 times more volatile than Franklin Mutual Global. It trades about 0.05 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.04 per unit of risk. If you would invest 2,008 in Gmo Emerging Markets on September 3, 2024 and sell it today you would earn a total of 424.00 from holding Gmo Emerging Markets or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Emerging Markets vs. Franklin Mutual Global
Performance |
| Timeline |
| Gmo Emerging Markets |
| Franklin Mutual Global |
Gmo Emerging and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Franklin Mutual
The main advantage of trading using opposite Gmo Emerging and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Gmo Emerging vs. Franklin Mutual Global | Gmo Emerging vs. Templeton Growth Fund | Gmo Emerging vs. Franklin Real Estate | Gmo Emerging vs. HUMANA INC |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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