Correlation Between Realestaterealreturn and Franklin Emerging

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

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

Diversification Opportunities for Realestaterealreturn and Franklin Emerging

0.82

Correlation Coefficient

Realestaterealreturn  Franklin Emerging

Very poor diversification

The 3 months correlation between Realestaterealreturn and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Realestaterealreturn Strategy 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 Realestaterealreturn 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 Realestaterealreturn Strategy Fund 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 Realestaterealreturn i.e., Realestaterealreturn and Franklin Emerging go up and down completely randomly.

Pair Corralation between Realestaterealreturn and Franklin Emerging

Assuming the 90 days horizon Realestaterealreturn Strategy Fund is expected to generate 5.46 times more return on investment than Franklin Emerging. However, Realestaterealreturn is 5.46 times more volatile than Franklin Emerging Market. It trades about 0.05 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.25 per unit of risk. If you would invest  2,557  in Realestaterealreturn Strategy Fund on December 28, 2024 and sell it today you would earn a total of  69.00  from holding Realestaterealreturn Strategy Fund or generate 2.7% return on investment over 90 days.

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

Realestaterealreturn Strategy   vs.  Franklin Emerging Market

Realestaterealreturn

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Realestaterealreturn Strategy Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Realestaterealreturn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Emerging Market

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Emerging Market are ranked lower than 19 (%) 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.

Pair Trading with Realestaterealreturn and Franklin Emerging

The main advantage of trading using opposite Realestaterealreturn and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realestaterealreturn 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 idea behind Realestaterealreturn Strategy Fund and Franklin Emerging Market 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.