Correlation Between Multisector Bond and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Franklin 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 Multisector Bond and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Franklin Emerging Market, you can compare the effects of market volatilities on Multisector Bond and Franklin 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 Multisector Bond with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Franklin Emerging.
Diversification Opportunities for Multisector Bond and Franklin Emerging
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multisector and Franklin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Franklin Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Emerging Market and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Franklin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Emerging Market has no effect on the direction of Multisector Bond i.e., Multisector Bond and Franklin Emerging go up and down completely randomly.
Pair Corralation between Multisector Bond and Franklin Emerging
Assuming the 90 days horizon Multisector Bond is expected to generate 1.38 times less return on investment than Franklin Emerging. In addition to that, Multisector Bond is 1.67 times more volatile than Franklin Emerging Market. It trades about 0.08 of its total potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.19 per unit of volatility. If you would invest 924.00 in Franklin Emerging Market on August 23, 2024 and sell it today you would earn a total of 289.00 from holding Franklin Emerging Market or generate 31.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Franklin Emerging Market
Performance |
| Timeline |
| Multisector Bond Sma |
| Franklin Emerging Market |
Multisector Bond and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Franklin Emerging
The main advantage of trading using opposite Multisector Bond and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Franklin 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 Franklin Emerging will offset losses from the drop in Franklin Emerging's long position.| Multisector Bond vs. Calvert Smallmid Cap A | Multisector Bond vs. Lebenthal Lisanti Small | Multisector Bond vs. Ab Small Cap | Multisector Bond vs. Pace Smallmedium Value |
| Franklin Emerging vs. California Bond Fund | Franklin Emerging vs. Multisector Bond Sma | Franklin Emerging vs. Dws Communications | Franklin Emerging vs. Transamerica Intermediate Muni |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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