Correlation Between Franklin Mutual and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual 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 Mutual 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 Mutual Global and Templeton Developing Markets, you can compare the effects of market volatilities on Franklin Mutual 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 Mutual with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Templeton Developing.
Diversification Opportunities for Franklin Mutual and Templeton Developing
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Templeton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global 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 Mutual 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 Mutual Global 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 Mutual i.e., Franklin Mutual and Templeton Developing go up and down completely randomly.
Pair Corralation between Franklin Mutual and Templeton Developing
Assuming the 90 days horizon Franklin Mutual is expected to generate 2.17 times less return on investment than Templeton Developing. But when comparing it to its historical volatility, Franklin Mutual Global is 1.36 times less risky than Templeton Developing. It trades about 0.04 of its potential returns per unit of risk. Templeton Developing Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,707 in Templeton Developing Markets on August 29, 2024 and sell it today you would earn a total of 249.00 from holding Templeton Developing Markets or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. Templeton Developing Markets
Performance |
| Timeline |
| Franklin Mutual Global |
| Templeton Developing |
Franklin Mutual and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Templeton Developing
The main advantage of trading using opposite Franklin Mutual and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual 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 Mutual vs. Mid Cap Growth Profund | Franklin Mutual vs. Mid Cap Value Profund | Franklin Mutual vs. Ultramid Cap Profund Ultramid Cap | Franklin Mutual vs. Mutual Of America |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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