Correlation Between Franklin Mutual and Calvert Emerging

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

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

Diversification Opportunities for Franklin Mutual and Calvert Emerging

0.73

Correlation Coefficient

Franklin Mutual  Calvert Emerging

Poor diversification

The 3 months correlation between Franklin and Calvert is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Franklin Mutual 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 Mutual Beacon are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Calvert Emerging go up and down completely randomly.

Pair Corralation between Franklin Mutual and Calvert Emerging

Assuming the 90 days horizon Franklin Mutual is expected to generate 2.92 times less return on investment than Calvert Emerging. But when comparing it to its historical volatility, Franklin Mutual Beacon is 1.07 times less risky than Calvert Emerging. It trades about 0.01 of its potential returns per unit of risk. Calvert Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Calvert Emerging Markets on October 8, 2024 and sell it today you would earn a total of  113.00  from holding Calvert Emerging Markets or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.81%
Values	Daily Returns

Franklin Mutual Beacon  vs.  Calvert Emerging Markets

Franklin Mutual Beacon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Mutual Beacon has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Calvert Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Franklin Mutual and Calvert Emerging

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

The idea behind Franklin Mutual Beacon and Calvert Emerging Markets 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.