Correlation Between Financial and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Franklin Templeton Limited, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Franklin Templeton.
Diversification Opportunities for Financial and Franklin Templeton
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Financial and Franklin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Financial 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 Financial 15 Split 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 Financial i.e., Financial and Franklin Templeton go up and down completely randomly.
Pair Corralation between Financial and Franklin Templeton
Assuming the 90 days horizon Financial is expected to generate 5.38 times less return on investment than Franklin Templeton. In addition to that, Financial is 3.88 times more volatile than Franklin Templeton Limited. It trades about 0.01 of its total potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.14 per unit of volatility. If you would invest 655.00 in Franklin Templeton Limited on November 27, 2024 and sell it today you would earn a total of 7.00 from holding Franklin Templeton Limited or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Franklin Templeton Limited
Performance |
| Timeline |
| Financial 15 Split |
| Franklin Templeton |
Financial and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Franklin Templeton
The main advantage of trading using opposite Financial and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. SEI Investments | Financial vs. Oxford Lane Capital | Financial vs. Blackstone Group | Financial vs. North American Financial |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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