Correlation Between Ford and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Franklin Templeton Multi Asset, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Franklin Templeton.
Diversification Opportunities for Ford and Franklin Templeton
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Franklin Templeton go up and down completely randomly.
Pair Corralation between Ford and Franklin Templeton
Taking into account the 90-day investment horizon Ford Motor is expected to generate 15.45 times more return on investment than Franklin Templeton. However, Ford is 15.45 times more volatile than Franklin Templeton Multi Asset. It trades about 0.01 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 1,073 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Ford Motor or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ford Motor vs. Franklin Templeton Multi Asset
Performance |
| Timeline |
| Ford Motor |
| Franklin Templeton |
Ford and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Franklin Templeton
The main advantage of trading using opposite Ford and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Franklin Templeton Multi Asset 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.| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |