Correlation Between Franklin MSCI and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Franklin MSCI and STMicroelectronics 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 MSCI and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin MSCI Emerging and STMicroelectronics NV, you can compare the effects of market volatilities on Franklin MSCI and STMicroelectronics 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 MSCI with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin MSCI and STMicroelectronics.
Diversification Opportunities for Franklin MSCI and STMicroelectronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and STMicroelectronics is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin MSCI Emerging and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Franklin MSCI 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 MSCI Emerging are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Franklin MSCI i.e., Franklin MSCI and STMicroelectronics go up and down completely randomly.
Pair Corralation between Franklin MSCI and STMicroelectronics
Assuming the 90 days trading horizon Franklin MSCI is expected to generate 3.2 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Franklin MSCI Emerging is 3.34 times less risky than STMicroelectronics. It trades about 0.23 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,975 in STMicroelectronics NV on April 24, 2025 and sell it today you would earn a total of 839.00 from holding STMicroelectronics NV or generate 42.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin MSCI Emerging vs. STMicroelectronics NV
Performance |
Timeline |
Franklin MSCI Emerging |
STMicroelectronics |
Franklin MSCI and STMicroelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin MSCI and STMicroelectronics
The main advantage of trading using opposite Franklin MSCI and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin MSCI position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.Franklin MSCI vs. Franklin LibertyQ Global | Franklin MSCI vs. Franklin Libertyshares ICAV | Franklin MSCI vs. Franklin FTSE Asia | Franklin MSCI vs. Franklin FTSE Brazil |
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Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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