Correlation Between Voya Global and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Voya Global 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 Voya Global and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Global Equity and Franklin Emerging Market, you can compare the effects of market volatilities on Voya Global 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 Voya Global with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and Franklin Emerging.
Diversification Opportunities for Voya Global and Franklin Emerging
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Franklin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Equity 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 Voya Global 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 Voya Global Equity 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 Voya Global i.e., Voya Global and Franklin Emerging go up and down completely randomly.
Pair Corralation between Voya Global and Franklin Emerging
Assuming the 90 days horizon Voya Global Equity is expected to generate 2.3 times more return on investment than Franklin Emerging. However, Voya Global is 2.3 times more volatile than Franklin Emerging Market. It trades about 0.13 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.27 per unit of risk. If you would invest 3,567 in Voya Global Equity on September 14, 2024 and sell it today you would earn a total of 724.00 from holding Voya Global Equity or generate 20.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Voya Global Equity vs. Franklin Emerging Market
Performance |
| Timeline |
| Voya Global Equity |
| Franklin Emerging Market |
Voya Global and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Global and Franklin Emerging
The main advantage of trading using opposite Voya Global and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Global 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.| Voya Global vs. Franklin Emerging Market | Voya Global vs. Transamerica Emerging Markets | Voya Global vs. Origin Emerging Markets | Voya Global vs. Mid Cap 15x Strategy |
| Franklin Emerging vs. Alger Health Sciences | Franklin Emerging vs. Highland Longshort Healthcare | Franklin Emerging vs. Baron Health Care | Franklin Emerging vs. Tekla Healthcare Opportunities |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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