Correlation Between Prudential Qma and Franklin Equity

Can any of the company-specific risk be diversified away by investing in both Prudential Qma and Franklin Equity 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 Prudential Qma and Franklin Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prudential Qma Emerging and Franklin Equity Income, you can compare the effects of market volatilities on Prudential Qma and Franklin Equity 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 Prudential Qma with a short position of Franklin Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Franklin Equity.

Diversification Opportunities for Prudential Qma and Franklin Equity

0.97

Correlation Coefficient

Prudential Qma  Franklin Equity

Almost no diversification

The 3 months correlation between Prudential and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Emerging and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income and Prudential Qma 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 Prudential Qma Emerging are associated (or correlated) with Franklin Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Prudential Qma i.e., Prudential Qma and Franklin Equity go up and down completely randomly.

Pair Corralation between Prudential Qma and Franklin Equity

Assuming the 90 days horizon Prudential Qma is expected to generate 1.12 times less return on investment than Franklin Equity. In addition to that, Prudential Qma is 1.45 times more volatile than Franklin Equity Income. It trades about 0.19 of its total potential returns per unit of risk. Franklin Equity Income is currently generating about 0.32 per unit of volatility. If you would invest  3,102  in Franklin Equity Income on May 22, 2025 and sell it today you would earn a total of  332.00  from holding Franklin Equity Income or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Prudential Qma Emerging  vs.  Franklin Equity Income

Prudential Qma Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Emerging are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Franklin Equity Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Equity Income are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Franklin Equity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Prudential Qma and Franklin Equity

The main advantage of trading using opposite Prudential Qma and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Qma position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.

The idea behind Prudential Qma Emerging and Franklin Equity Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.