Correlation Between Templeton Developing and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin Gold 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 Templeton Developing and Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Developing Markets and Franklin Gold And, you can compare the effects of market volatilities on Templeton Developing and Franklin Gold 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 Templeton Developing with a short position of Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin Gold.
Diversification Opportunities for Templeton Developing and Franklin Gold
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin Gold And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold And and Templeton Developing 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 Templeton Developing Markets are associated (or correlated) with Franklin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Gold And has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin Gold go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin Gold
Assuming the 90 days horizon Templeton Developing Markets is expected to generate 0.47 times more return on investment than Franklin Gold. However, Templeton Developing Markets is 2.12 times less risky than Franklin Gold. It trades about -0.13 of its potential returns per unit of risk. Franklin Gold And is currently generating about -0.26 per unit of risk. If you would invest 2,005 in Templeton Developing Markets on August 31, 2024 and sell it today you would lose (57.00) from holding Templeton Developing Markets or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Franklin Gold And
Performance |
| Timeline |
| Templeton Developing |
| Franklin Gold And |
Templeton Developing and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin Gold
The main advantage of trading using opposite Templeton Developing and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin Gold 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 Franklin Gold will offset losses from the drop in Franklin Gold's long position.| Templeton Developing vs. Pear Tree Polaris | Templeton Developing vs. Artisan High Income | Templeton Developing vs. HUMANA INC | Templeton Developing vs. Aquagold International |
| Franklin Gold vs. Mesirow Financial Small | Franklin Gold vs. Davis Financial Fund | Franklin Gold vs. Fidelity Advisor Financial | Franklin Gold vs. John Hancock Financial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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