Correlation Between Franklin Templeton and American Century
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton Multi Asset and American Century One, you can compare the effects of market volatilities on Franklin Templeton and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and American Century.
Diversification Opportunities for Franklin Templeton and American Century
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Multi Asset and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One 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 Multi Asset are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century One has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and American Century go up and down completely randomly.
Pair Corralation between Franklin Templeton and American Century
Assuming the 90 days horizon Franklin Templeton is expected to generate 8.66 times less return on investment than American Century. But when comparing it to its historical volatility, Franklin Templeton Multi Asset is 2.94 times less risky than American Century. It trades about 0.12 of its potential returns per unit of risk. American Century One is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,123 in American Century One on September 2, 2024 and sell it today you would earn a total of 49.00 from holding American Century One or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton Multi Asset vs. American Century One
Performance |
| Timeline |
| Franklin Templeton |
| American Century One |
Franklin Templeton and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and American Century
The main advantage of trading using opposite Franklin Templeton and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Franklin Templeton vs. First Trust Managed | Franklin Templeton vs. First Trust Short | Franklin Templeton vs. First Trust Short | Franklin Templeton vs. Vivaldi Merger Arbitrage |
| American Century vs. Harbor Vertible Securities | American Century vs. Columbia Vertible Securities | American Century vs. Putnam Convertible Incm Gwth | American Century vs. Virtus Convertible |
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 Stocks Directory module to find actively traded stocks across global markets.
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