Correlation Between Franklin Emerging and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Transamerica 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 Emerging and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Emerging Market and Transamerica Emerging Markets, you can compare the effects of market volatilities on Franklin Emerging and Transamerica 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 Emerging with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Transamerica Emerging.
Diversification Opportunities for Franklin Emerging and Transamerica Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Transamerica is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Franklin 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 Franklin Emerging Market are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Franklin Emerging and Transamerica Emerging
Assuming the 90 days horizon Franklin Emerging Market is expected to under-perform the Transamerica Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Emerging Market is 2.95 times less risky than Transamerica Emerging. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Transamerica Emerging Markets is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Transamerica Emerging Markets on January 28, 2024 and sell it today you would earn a total of 12.00 from holding Transamerica Emerging Markets or generate 1.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Emerging Market vs. Transamerica Emerging Markets
Performance |
Timeline |
Franklin Emerging Market |
Transamerica Emerging |
Franklin Emerging and Transamerica Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Emerging and Transamerica Emerging
The main advantage of trading using opposite Franklin Emerging and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Transamerica 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.Franklin Emerging vs. Lord Abbett Diversified | Franklin Emerging vs. Aqr Diversified Arbitrage | Franklin Emerging vs. Fidelity Advisor Diversified | Franklin Emerging vs. Davenport 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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