Correlation Between Franklin Real and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Franklin Real 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 Real 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 Real Estate and Templeton Developing Markets, you can compare the effects of market volatilities on Franklin Real 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 Real with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Templeton Developing.
Diversification Opportunities for Franklin Real and Templeton Developing
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Templeton is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate 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 Real 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 Real Estate 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 Real i.e., Franklin Real and Templeton Developing go up and down completely randomly.
Pair Corralation between Franklin Real and Templeton Developing
Assuming the 90 days horizon Franklin Real Estate is expected to generate 0.86 times more return on investment than Templeton Developing. However, Franklin Real Estate is 1.16 times less risky than Templeton Developing. It trades about 0.09 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 1,685 in Franklin Real Estate on August 25, 2024 and sell it today you would earn a total of 268.00 from holding Franklin Real Estate or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Templeton Developing Markets
Performance |
| Timeline |
| Franklin Real Estate |
| Templeton Developing |
Franklin Real and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Templeton Developing
The main advantage of trading using opposite Franklin Real and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real 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 Real vs. Franklin Natural Resources | Franklin Real vs. Franklin Small Cap | Franklin Real vs. Templeton Developing Markets | Franklin Real vs. Franklin Balance Sheet |
| Templeton Developing vs. Templeton Foreign Fund | Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Franklin Small Mid Cap | Templeton Developing vs. Franklin Real Estate |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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