Correlation Between Franklin Utilities and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Franklin Utilities and Templeton Developing 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 Utilities and Templeton Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Utilities Fund and Templeton Developing Markets, you can compare the effects of market volatilities on Franklin Utilities and Templeton Developing 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 Utilities with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Utilities and Templeton Developing.
Diversification Opportunities for Franklin Utilities and Templeton Developing
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Templeton is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Utilities Fund and Templeton Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Developing and Franklin Utilities 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 Utilities Fund are associated (or correlated) with Templeton Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Developing has no effect on the direction of Franklin Utilities i.e., Franklin Utilities and Templeton Developing go up and down completely randomly.
Pair Corralation between Franklin Utilities and Templeton Developing
Assuming the 90 days horizon Franklin Utilities Fund is expected to generate 1.19 times more return on investment than Templeton Developing. However, Franklin Utilities is 1.19 times more volatile than Templeton Developing Markets. It trades about 0.13 of its potential returns per unit of risk. Templeton Developing Markets is currently generating about -0.14 per unit of risk. If you would invest 2,493 in Franklin Utilities Fund on August 25, 2024 and sell it today you would earn a total of 80.00 from holding Franklin Utilities Fund or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Utilities Fund vs. Templeton Developing Markets
Performance |
| Timeline |
| Franklin Utilities |
| Templeton Developing |
Franklin Utilities and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Utilities and Templeton Developing
The main advantage of trading using opposite Franklin Utilities and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Utilities position performs unexpectedly, Templeton Developing 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 Developing will offset losses from the drop in Templeton Developing's long position.| Franklin Utilities vs. Angel Oak Ultrashort | Franklin Utilities vs. Calvert Short Duration | Franklin Utilities vs. Locorr Longshort Modities | Franklin Utilities vs. Aqr Long Short Equity |
| Templeton Developing vs. Templeton Foreign Fund | Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Franklin Small Mid Cap | Templeton Developing vs. Franklin Real Estate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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