Correlation Between Franklin Real and Thornburg Developing
Can any of the company-specific risk be diversified away by investing in both Franklin Real and Thornburg 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 Thornburg 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 Thornburg Developing World, you can compare the effects of market volatilities on Franklin Real and Thornburg 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 Thornburg Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Thornburg Developing.
Diversification Opportunities for Franklin Real and Thornburg Developing
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between FRANKLIN and Thornburg is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate and Thornburg Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg 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 Thornburg Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Developing has no effect on the direction of Franklin Real i.e., Franklin Real and Thornburg Developing go up and down completely randomly.
Pair Corralation between Franklin Real and Thornburg Developing
Assuming the 90 days horizon Franklin Real Estate is expected to generate 1.39 times more return on investment than Thornburg Developing. However, Franklin Real is 1.39 times more volatile than Thornburg Developing World. It trades about 0.12 of its potential returns per unit of risk. Thornburg Developing World is currently generating about -0.22 per unit of risk. If you would invest 1,915 in Franklin Real Estate on September 4, 2024 and sell it today you would earn a total of 44.00 from holding Franklin Real Estate or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Real Estate vs. Thornburg Developing World
Performance |
| Timeline |
| Franklin Real Estate |
| Thornburg Developing |
Franklin Real and Thornburg Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Thornburg Developing
The main advantage of trading using opposite Franklin Real and Thornburg Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real position performs unexpectedly, Thornburg 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 Thornburg Developing will offset losses from the drop in Thornburg 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 |
| Thornburg Developing vs. Thornburg Value Fund | Thornburg Developing vs. Thornburg Value Fund | Thornburg Developing vs. Thornburg International Value | Thornburg Developing vs. Thornburg International Value |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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