Correlation Between Transamerica Emerging and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging 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 Transamerica Emerging and Franklin Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Franklin Emerging Market, you can compare the effects of market volatilities on Transamerica Emerging 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 Transamerica Emerging with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Franklin Emerging.
Diversification Opportunities for Transamerica Emerging and Franklin Emerging
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets 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 Transamerica 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 Transamerica Emerging Markets 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 Transamerica Emerging i.e., Transamerica Emerging and Franklin Emerging go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Franklin Emerging
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Franklin Emerging. In addition to that, Transamerica Emerging is 3.2 times more volatile than Franklin Emerging Market. It trades about -0.19 of its total potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.18 per unit of volatility. If you would invest 1,204 in Franklin Emerging Market on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Franklin Emerging Market or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Franklin Emerging Market
Performance |
| Timeline |
| Transamerica Emerging |
| Franklin Emerging Market |
Transamerica Emerging and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Franklin Emerging
The main advantage of trading using opposite Transamerica Emerging and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging 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.| Transamerica Emerging vs. Tax Managed Mid Small | Transamerica Emerging vs. Ancorathelen Small Mid Cap | Transamerica Emerging vs. Touchstone Small Cap | Transamerica Emerging vs. Ab Small Cap |
| Franklin Emerging vs. Chartwell Short Duration | Franklin Emerging vs. Ultra Short Term Fixed | Franklin Emerging vs. Maryland Tax Free Bond | Franklin Emerging vs. Bbh Intermediate Municipal |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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