Correlation Between Franklin Mutual and Deutsche Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Deutsche 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 Deutsche Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Global and Deutsche Emerging Markets, you can compare the effects of market volatilities on Franklin Mutual and Deutsche 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 Deutsche Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Deutsche Emerging.
Diversification Opportunities for Franklin Mutual and Deutsche Emerging
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Deutsche is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and Deutsche Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Emerging Markets 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 Global are associated (or correlated) with Deutsche Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Emerging Markets has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Deutsche Emerging go up and down completely randomly.
Pair Corralation between Franklin Mutual and Deutsche Emerging
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 0.85 times more return on investment than Deutsche Emerging. However, Franklin Mutual Global is 1.17 times less risky than Deutsche Emerging. It trades about 0.04 of its potential returns per unit of risk. Deutsche Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 2,762 in Franklin Mutual Global on September 4, 2024 and sell it today you would earn a total of 447.00 from holding Franklin Mutual Global or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. Deutsche Emerging Markets
Performance |
| Timeline |
| Franklin Mutual Global |
| Deutsche Emerging Markets |
Franklin Mutual and Deutsche Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Deutsche Emerging
The main advantage of trading using opposite Franklin Mutual and Deutsche Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Deutsche 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 Deutsche Emerging will offset losses from the drop in Deutsche Emerging's long position.| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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