Correlation Between Franklin Emerging and Janus Forty

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

Diversification Opportunities for Franklin Emerging and Janus Forty

0.09

Correlation Coefficient

Franklin Emerging  Janus Forty

Significant diversification

The 3 months correlation between FRANKLIN and Janus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Janus Forty Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Forty Fund 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 Janus Forty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Forty Fund has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Janus Forty go up and down completely randomly.

Pair Corralation between Franklin Emerging and Janus Forty

Assuming the 90 days horizon Franklin Emerging is expected to generate 1.03 times less return on investment than Janus Forty. But when comparing it to its historical volatility, Franklin Emerging Market is 4.84 times less risky than Janus Forty. It trades about 0.42 of its potential returns per unit of risk. Janus Forty Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,230  in Janus Forty Fund on October 27, 2024 and sell it today you would earn a total of  93.00  from holding Janus Forty Fund or generate 1.78% return on investment over 90 days.

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

Franklin Emerging Market  vs.  Janus Forty Fund

Franklin Emerging Market

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Emerging Market are ranked lower than 11 (%) 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.

Janus Forty Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Forty Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Janus Forty 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 Janus Forty

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

The idea behind Franklin Emerging Market and Janus Forty Fund 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.