Correlation Between Templeton Developing and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin Utilities 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 Utilities 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 Utilities Fund, you can compare the effects of market volatilities on Templeton Developing and Franklin Utilities 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 Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin Utilities.
Diversification Opportunities for Templeton Developing and Franklin Utilities
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and Franklin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities 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 Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin Utilities go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin Utilities
Assuming the 90 days horizon Templeton Developing is expected to generate 5.38 times less return on investment than Franklin Utilities. In addition to that, Templeton Developing is 1.3 times more volatile than Franklin Utilities Fund. It trades about 0.02 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about 0.17 per unit of volatility. If you would invest 2,135 in Franklin Utilities Fund on August 25, 2024 and sell it today you would earn a total of 438.00 from holding Franklin Utilities Fund or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Templeton Developing Markets vs. Franklin Utilities Fund
Performance |
| Timeline |
| Templeton Developing |
| Franklin Utilities |
Templeton Developing and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin Utilities
The main advantage of trading using opposite Templeton Developing and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| 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 |
| Franklin Utilities vs. Angel Oak Ultrashort | Franklin Utilities vs. Calvert Short Duration | Franklin Utilities vs. Locorr Longshort Modities | Franklin Utilities vs. Aqr Long Short Equity |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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