Correlation Between Franklin Moderate and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Templeton Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Franklin Moderate and Templeton Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Templeton Emerging.
Diversification Opportunities for Franklin Moderate and Templeton Emerging
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Templeton is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Templeton Emerging go up and down completely randomly.
Pair Corralation between Franklin Moderate and Templeton Emerging
Assuming the 90 days horizon Franklin Moderate Allocation is expected to generate 0.82 times more return on investment than Templeton Emerging. However, Franklin Moderate Allocation is 1.22 times less risky than Templeton Emerging. It trades about 0.29 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest 1,580 in Franklin Moderate Allocation on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Franklin Moderate Allocation or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Templeton Emerging Markets
Performance |
| Timeline |
| Franklin Moderate |
| Templeton Emerging |
Franklin Moderate and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Templeton Emerging
The main advantage of trading using opposite Franklin Moderate and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's long position.| Franklin Moderate vs. John Hancock Financial | Franklin Moderate vs. Vanguard Financials Index | Franklin Moderate vs. Royce Global Financial | Franklin Moderate vs. Davis Financial Fund |
| Templeton Emerging vs. Growth Opportunities Fund | Templeton Emerging vs. Nasdaq 100 Index Fund | Templeton Emerging vs. Balanced Fund Investor | Templeton Emerging vs. Commonwealth Global Fund |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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