Correlation Between Franklin Moderate and Templeton Global

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Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Templeton Global 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 Moderate and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Templeton Global Smaller, you can compare the effects of market volatilities on Franklin Moderate and Templeton Global 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 Moderate with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Templeton Global.

Diversification Opportunities for Franklin Moderate and Templeton Global

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Franklin and Templeton is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Templeton Global Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Smaller and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Smaller has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Templeton Global go up and down completely randomly.

Pair Corralation between Franklin Moderate and Templeton Global

Assuming the 90 days horizon Franklin Moderate is expected to generate 1.1 times less return on investment than Templeton Global. But when comparing it to its historical volatility, Franklin Moderate Allocation is 2.0 times less risky than Templeton Global. It trades about 0.29 of its potential returns per unit of risk. Templeton Global Smaller is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Templeton Global Smaller on September 2, 2024 and sell it today you would earn a total of  27.00  from holding Templeton Global Smaller or generate 2.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Franklin Moderate Allocation  vs.  Templeton Global Smaller

 Performance 
       Timeline  
Franklin Moderate 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Moderate Allocation are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Franklin Moderate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Templeton Global Smaller 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Global Smaller are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Templeton Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Moderate and Templeton Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Moderate and Templeton Global

The main advantage of trading using opposite Franklin Moderate and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.
The idea behind Franklin Moderate Allocation and Templeton Global Smaller 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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