Correlation Between Franklin Emerging and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime Hybrid, you can compare the effects of market volatilities on Franklin Emerging and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Principal Lifetime.
Diversification Opportunities for Franklin Emerging and Principal Lifetime
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Principal is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Principal Lifetime go up and down completely randomly.
Pair Corralation between Franklin Emerging and Principal Lifetime
Assuming the 90 days horizon Franklin Emerging is expected to generate 1.42 times less return on investment than Principal Lifetime. But when comparing it to its historical volatility, Franklin Emerging Market is 1.92 times less risky than Principal Lifetime. It trades about 0.41 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,315 in Principal Lifetime Hybrid on April 29, 2025 and sell it today you would earn a total of 105.00 from holding Principal Lifetime Hybrid or generate 7.98% 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. Principal Lifetime Hybrid
Performance |
| Timeline |
| Franklin Emerging Market |
| Principal Lifetime Hybrid |
Franklin Emerging and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Principal Lifetime
The main advantage of trading using opposite Franklin Emerging and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| Franklin Emerging vs. Qs Large Cap | Franklin Emerging vs. Neiman Large Cap | Franklin Emerging vs. Dana Large Cap | Franklin Emerging vs. Vest Large Cap |
| Principal Lifetime vs. Aqr Diversified Arbitrage | Principal Lifetime vs. Lord Abbett Diversified | Principal Lifetime vs. Fidelity Advisor Diversified | Principal Lifetime vs. Allianzgi Diversified Income |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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