Correlation Between Stone Harbor and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Stone Harbor 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 Stone Harbor and Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Harbor Emerging and Franklin Mutual Shares, you can compare the effects of market volatilities on Stone Harbor 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 Stone Harbor with a short position of Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Franklin Mutual.
Diversification Opportunities for Stone Harbor and Franklin Mutual
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stone and Franklin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares and Stone Harbor 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 Stone Harbor Emerging 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 Shares has no effect on the direction of Stone Harbor i.e., Stone Harbor and Franklin Mutual go up and down completely randomly.
Pair Corralation between Stone Harbor and Franklin Mutual
Assuming the 90 days horizon Stone Harbor Emerging is expected to generate 0.47 times more return on investment than Franklin Mutual. However, Stone Harbor Emerging is 2.12 times less risky than Franklin Mutual. It trades about 0.26 of its potential returns per unit of risk. Franklin Mutual Shares is currently generating about 0.06 per unit of risk. If you would invest 740.00 in Stone Harbor Emerging on December 1, 2024 and sell it today you would earn a total of 11.00 from holding Stone Harbor Emerging or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Harbor Emerging vs. Franklin Mutual Shares
Performance |
| Timeline |
| Stone Harbor Emerging |
| Franklin Mutual Shares |
Stone Harbor and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Harbor and Franklin Mutual
The main advantage of trading using opposite Stone Harbor and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor 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.| Stone Harbor vs. Stone Harbor Emerging | Stone Harbor vs. Ashmore Emerging Markets | Stone Harbor vs. Select International Equity | Stone Harbor vs. Timothy Plan High |
| Franklin Mutual vs. Franklin Mutual Quest | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Franklin Mutual European |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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