Correlation Between Franklin Emerging and Greenspring Income

Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Greenspring Income 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 Greenspring Income 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 Greenspring Income Opportunities, you can compare the effects of market volatilities on Franklin Emerging and Greenspring Income 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 Greenspring Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Greenspring Income.

Diversification Opportunities for Franklin Emerging and Greenspring Income

0.86

Correlation Coefficient

Franklin Emerging  Greenspring Income

Very poor diversification

The 3 months correlation between Franklin and Greenspring is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Greenspring Income Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenspring Income 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 Greenspring Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenspring Income has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Greenspring Income go up and down completely randomly.

Pair Corralation between Franklin Emerging and Greenspring Income

If you would invest  1,210  in Franklin Emerging Market on September 16, 2024 and sell it today you would earn a total of  6.00  from holding Franklin Emerging Market or generate 0.5% return on investment over 90 days.

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

Franklin Emerging Market  vs.  Greenspring Income Opportuniti

Franklin Emerging Market

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Emerging Market are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Greenspring Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenspring Income Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Greenspring Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Emerging and Greenspring Income

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

The idea behind Franklin Emerging Market and Greenspring Income Opportunities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.