Correlation Between Franklin Arizona and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Franklin Arizona and Templeton Foreign 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 Arizona and Templeton Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Arizona Tax Free and Templeton Foreign Fund, you can compare the effects of market volatilities on Franklin Arizona and Templeton Foreign 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 Arizona with a short position of Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Arizona and Templeton Foreign.
Diversification Opportunities for Franklin Arizona and Templeton Foreign
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Templeton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Arizona Tax Free and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Franklin Arizona 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 Arizona Tax Free are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Franklin Arizona i.e., Franklin Arizona and Templeton Foreign go up and down completely randomly.
Pair Corralation between Franklin Arizona and Templeton Foreign
Assuming the 90 days horizon Franklin Arizona is expected to generate 1.12 times less return on investment than Templeton Foreign. But when comparing it to its historical volatility, Franklin Arizona Tax Free is 3.88 times less risky than Templeton Foreign. It trades about 0.16 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 725.00 in Templeton Foreign Fund on August 29, 2024 and sell it today you would earn a total of 91.00 from holding Templeton Foreign Fund or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Franklin Arizona Tax Free vs. Templeton Foreign Fund
Performance |
| Timeline |
| Franklin Arizona Tax |
| Templeton Foreign |
Franklin Arizona and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Arizona and Templeton Foreign
The main advantage of trading using opposite Franklin Arizona and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Arizona position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.| Franklin Arizona vs. Pimco Diversified Income | Franklin Arizona vs. Blackrock Conservative Prprdptfinstttnl | Franklin Arizona vs. Huber Capital Diversified | Franklin Arizona vs. Evaluator Conservative Rms |
| Templeton Foreign vs. Victory High Income | Templeton Foreign vs. Ppm High Yield | Templeton Foreign vs. Morningstar Aggressive Growth | Templeton Foreign vs. Artisan High Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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