Correlation Between Dws Emerging and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Dws Emerging and Franklin Small 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 Dws Emerging and Franklin Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dws Emerging Markets and Franklin Small Cap, you can compare the effects of market volatilities on Dws Emerging and Franklin Small 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 Dws Emerging with a short position of Franklin Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dws Emerging and Franklin Small.
Diversification Opportunities for Dws Emerging and Franklin Small
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dws and Franklin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dws Emerging Markets and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap and Dws 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 Dws Emerging Markets are associated (or correlated) with Franklin Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Cap has no effect on the direction of Dws Emerging i.e., Dws Emerging and Franklin Small go up and down completely randomly.
Pair Corralation between Dws Emerging and Franklin Small
Assuming the 90 days horizon Dws Emerging Markets is expected to under-perform the Franklin Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dws Emerging Markets is 1.55 times less risky than Franklin Small. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Franklin Small Cap is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 1,671 in Franklin Small Cap on October 16, 2024 and sell it today you would lose (64.00) from holding Franklin Small Cap or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dws Emerging Markets vs. Franklin Small Cap
Performance |
| Timeline |
| Dws Emerging Markets |
| Franklin Small Cap |
Dws Emerging and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dws Emerging and Franklin Small
The main advantage of trading using opposite Dws Emerging and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dws Emerging position performs unexpectedly, Franklin Small 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 Small will offset losses from the drop in Franklin Small's long position.| Dws Emerging vs. Us Government Securities | Dws Emerging vs. Payden Government Fund | Dws Emerging vs. Lord Abbett Government | Dws Emerging vs. Dreyfus Government Cash |
| Franklin Small vs. Pace Smallmedium Value | Franklin Small vs. Touchstone Small Cap | Franklin Small vs. Small Pany Growth | Franklin Small vs. Aqr Small Cap |
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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