Correlation Between Dow Jones and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Franklin Templeton 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 Dow Jones and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Franklin Templeton Multi Asset, you can compare the effects of market volatilities on Dow Jones and Franklin Templeton 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 Dow Jones with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Franklin Templeton.
Diversification Opportunities for Dow Jones and Franklin Templeton
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Franklin Templeton Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of Dow Jones i.e., Dow Jones and Franklin Templeton go up and down completely randomly.
Pair Corralation between Dow Jones and Franklin Templeton
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.81 times more return on investment than Franklin Templeton. However, Dow Jones is 4.81 times more volatile than Franklin Templeton Multi Asset. It trades about 0.09 of its potential returns per unit of risk. Franklin Templeton Multi Asset is currently generating about 0.21 per unit of risk. If you would invest 3,351,765 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,139,300 from holding Dow Jones Industrial or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Dow Jones Industrial vs. Franklin Templeton Multi Asset
Performance |
| Timeline |
Dow Jones and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Franklin Templeton Multi Asset
Pair trading matchups for Franklin Templeton
Pair Trading with Dow Jones and Franklin Templeton
The main advantage of trading using opposite Dow Jones and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Franklin Templeton vs. Mfs International Diversification | Franklin Templeton vs. HUMANA INC | Franklin Templeton vs. Aquagold International | Franklin Templeton vs. Barloworld Ltd ADR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |