Correlation Between Franklin Strategic and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Franklin Strategic 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 Strategic 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 Strategic Series and Templeton Developing Markets, you can compare the effects of market volatilities on Franklin Strategic 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 Strategic with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Strategic and Templeton Developing.
Diversification Opportunities for Franklin Strategic and Templeton Developing
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Templeton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Strategic Series 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 Strategic 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 Strategic Series 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 Strategic i.e., Franklin Strategic and Templeton Developing go up and down completely randomly.
Pair Corralation between Franklin Strategic and Templeton Developing
Assuming the 90 days horizon Franklin Strategic Series is expected to generate 0.27 times more return on investment than Templeton Developing. However, Franklin Strategic Series is 3.75 times less risky than Templeton Developing. It trades about 0.19 of its potential returns per unit of risk. Templeton Developing Markets is currently generating about -0.05 per unit of risk. If you would invest 794.00 in Franklin Strategic Series on October 22, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Strategic Series or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Strategic Series vs. Templeton Developing Markets
Performance |
| Timeline |
| Franklin Strategic Series |
| Templeton Developing |
Franklin Strategic and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Strategic and Templeton Developing
The main advantage of trading using opposite Franklin Strategic and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Strategic 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 Strategic vs. Environment And Alternative | Franklin Strategic vs. Thrivent Natural Resources | Franklin Strategic vs. Invesco Energy Fund | Franklin Strategic vs. Hennessy Bp Energy |
| Templeton Developing vs. Templeton Foreign Fund | Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Templeton Growth Fund | Templeton Developing vs. Franklin Small Mid Cap |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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