Correlation Between Jpmorgan Emerging and Franklin Dynatech

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

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

Diversification Opportunities for Jpmorgan Emerging and Franklin Dynatech

0.65

Correlation Coefficient

Jpmorgan Emerging  Franklin Dynatech

Poor diversification

The 3 months correlation between Jpmorgan and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Emerging Markets and Franklin Dynatech Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Dynatech and Jpmorgan 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 Jpmorgan Emerging Markets are associated (or correlated) with Franklin Dynatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Dynatech has no effect on the direction of Jpmorgan Emerging i.e., Jpmorgan Emerging and Franklin Dynatech go up and down completely randomly.

Pair Corralation between Jpmorgan Emerging and Franklin Dynatech

Assuming the 90 days horizon Jpmorgan Emerging is expected to generate 3.32 times less return on investment than Franklin Dynatech. But when comparing it to its historical volatility, Jpmorgan Emerging Markets is 1.46 times less risky than Franklin Dynatech. It trades about 0.03 of its potential returns per unit of risk. Franklin Dynatech Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,458  in Franklin Dynatech Fund on February 13, 2024 and sell it today you would earn a total of  5,558  from holding Franklin Dynatech Fund or generate 53.15% return on investment over 90 days.

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

Jpmorgan Emerging Markets  vs.  Franklin Dynatech Fund

Jpmorgan Emerging Markets

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Emerging Markets are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Jpmorgan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Dynatech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Dynatech 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, Franklin Dynatech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Emerging and Franklin Dynatech

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

The idea behind Jpmorgan Emerging Markets and Franklin Dynatech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.