Correlation Between The Emerging and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both The Emerging and Franklin 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 The Emerging and Franklin Emerging 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 Emerging Market, you can compare the effects of market volatilities on The Emerging and Franklin 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 The Emerging with a short position of Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Emerging and Franklin Emerging.
Diversification Opportunities for The Emerging and Franklin Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Franklin Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Emerging Market 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Emerging Market has no effect on the direction of The Emerging i.e., The Emerging and Franklin Emerging go up and down completely randomly.
Pair Corralation between The Emerging and Franklin Emerging
Assuming the 90 days horizon The Emerging Markets is expected to generate 3.67 times more return on investment than Franklin Emerging. However, The Emerging is 3.67 times more volatile than Franklin Emerging Market. It trades about 0.25 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.51 per unit of risk. If you would invest 1,959 in The Emerging Markets on June 2, 2025 and sell it today you would earn a total of 205.00 from holding The Emerging Markets or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Emerging Markets vs. Franklin Emerging Market
Performance |
| Timeline |
| Emerging Markets |
| Franklin Emerging Market |
The Emerging and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Emerging and Franklin Emerging
The main advantage of trading using opposite The Emerging and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging position performs unexpectedly, Franklin 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 Franklin Emerging will offset losses from the drop in Franklin Emerging's long position.| The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
| Franklin Emerging vs. Franklin Mutual Beacon | Franklin Emerging vs. Templeton Developing Markets | Franklin Emerging vs. Franklin Mutual Global | Franklin Emerging vs. Franklin Mutual Global |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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