Correlation Between Franklin Mutual and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Transamerica 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 Mutual and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Quest and Transamerica Emerging Markets, you can compare the effects of market volatilities on Franklin Mutual and Transamerica 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 Mutual with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Transamerica Emerging.
Diversification Opportunities for Franklin Mutual and Transamerica Emerging
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Transamerica is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Quest and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Franklin Mutual 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 Mutual Quest are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Franklin Mutual and Transamerica Emerging
Assuming the 90 days horizon Franklin Mutual Quest is expected to generate 0.62 times more return on investment than Transamerica Emerging. However, Franklin Mutual Quest is 1.61 times less risky than Transamerica Emerging. It trades about 0.12 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 1,321 in Franklin Mutual Quest on September 4, 2024 and sell it today you would earn a total of 230.00 from holding Franklin Mutual Quest or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Quest vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Franklin Mutual Quest |
| Transamerica Emerging |
Franklin Mutual and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Transamerica Emerging
The main advantage of trading using opposite Franklin Mutual and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Transamerica 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Franklin Mutual vs. Transamerica Emerging Markets | Franklin Mutual vs. Black Oak Emerging | Franklin Mutual vs. The Emerging Markets | Franklin Mutual vs. T Rowe Price |
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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