Correlation Between Franklin Templeton and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton 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 Templeton 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 Templeton Smacs and Templeton Emerging Markets, you can compare the effects of market volatilities on Franklin Templeton 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 Templeton with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Templeton Emerging.
Diversification Opportunities for Franklin Templeton and Templeton Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Templeton is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Smacs 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 Templeton 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 Templeton Smacs 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 Templeton i.e., Franklin Templeton and Templeton Emerging go up and down completely randomly.
Pair Corralation between Franklin Templeton and Templeton Emerging
Assuming the 90 days horizon Franklin Templeton Smacs is expected to under-perform the Templeton Emerging. In addition to that, Franklin Templeton is 2.36 times more volatile than Templeton Emerging Markets. It trades about -0.13 of its total potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.31 per unit of volatility. If you would invest 1,427 in Templeton Emerging Markets on August 24, 2024 and sell it today you would lose (43.00) from holding Templeton Emerging Markets or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Templeton Smacs vs. Templeton Emerging Markets
Performance |
| Timeline |
| Franklin Templeton Smacs |
| Templeton Emerging |
Franklin Templeton and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Templeton Emerging
The main advantage of trading using opposite Franklin Templeton and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton 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 Templeton vs. Prudential Jennison Financial | Franklin Templeton vs. Fidelity Advisor Financial | Franklin Templeton vs. Goldman Sachs Financial | Franklin Templeton vs. Gabelli Global Financial |
| Templeton Emerging vs. Transamerica Large Cap | Templeton Emerging vs. Legg Mason Bw | Templeton Emerging vs. Aqr Large Cap | Templeton Emerging vs. William Blair Large |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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