Correlation Between Emerging Economies and Franklin Equity

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

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

Diversification Opportunities for Emerging Economies and Franklin Equity

0.0

Correlation Coefficient

Emerging Economies  Franklin Equity

Pay attention - limited upside

The 3 months correlation between Emerging and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Economies Fund 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 Emerging Economies 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 Emerging Economies Fund 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 Emerging Economies i.e., Emerging Economies and Franklin Equity go up and down completely randomly.

Pair Corralation between Emerging Economies and Franklin Equity

If you would invest  3,129  in Franklin Equity Income on May 28, 2025 and sell it today you would earn a total of  326.00  from holding Franklin Equity Income or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Emerging Economies Fund  vs.  Franklin Equity Income

Emerging Economies

Risk-Adjusted Performance

Good

Over the last 90 days Emerging Economies Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Emerging Economies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Emerging Economies and Franklin Equity

The main advantage of trading using opposite Emerging Economies and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Economies 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 Emerging Economies Fund 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.