Correlation Between The Emerging and Franklin Mutual

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

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

Diversification Opportunities for The Emerging and Franklin Mutual

0.17

Correlation Coefficient

The Emerging  Franklin Mutual

Average diversification

The 3 months correlation between The and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Franklin Mutual Quest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Quest and The 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 The Emerging Markets are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Quest has no effect on the direction of The Emerging i.e., The Emerging and Franklin Mutual go up and down completely randomly.

Pair Corralation between The Emerging and Franklin Mutual

Assuming the 90 days horizon The Emerging is expected to generate 1.71 times less return on investment than Franklin Mutual. In addition to that, The Emerging is 1.61 times more volatile than Franklin Mutual Quest. It trades about 0.04 of its total potential returns per unit of risk. Franklin Mutual Quest is currently generating about 0.12 per unit of volatility. If you would invest  1,321  in Franklin Mutual Quest on September 4, 2024 and sell it today you would earn a total of  230.00  from holding Franklin Mutual Quest or generate 17.41% return on investment over 90 days.

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

The Emerging Markets  vs.  Franklin Mutual Quest

Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, The Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Mutual Quest

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Quest are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Franklin Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Emerging and Franklin Mutual

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

The idea behind The Emerging Markets and Franklin Mutual Quest 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.