Correlation Between Templeton Developing and Franklin Moderate
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin Moderate 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 Moderate 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 Moderate Allocation, you can compare the effects of market volatilities on Templeton Developing and Franklin Moderate 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 Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin Moderate.
Diversification Opportunities for Templeton Developing and Franklin Moderate
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and FRANKLIN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate 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 Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin Moderate go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin Moderate
Assuming the 90 days horizon Templeton Developing is expected to generate 1.14 times less return on investment than Franklin Moderate. In addition to that, Templeton Developing is 2.23 times more volatile than Franklin Moderate Allocation. It trades about 0.05 of its total potential returns per unit of risk. Franklin Moderate Allocation is currently generating about 0.12 per unit of volatility. If you would invest 1,506 in Franklin Moderate Allocation on August 29, 2024 and sell it today you would earn a total of 114.00 from holding Franklin Moderate Allocation or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Franklin Moderate Allocation
Performance |
| Timeline |
| Templeton Developing |
| Franklin Moderate |
Templeton Developing and Franklin Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin Moderate
The main advantage of trading using opposite Templeton Developing and Franklin Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin Moderate 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 Moderate will offset losses from the drop in Franklin Moderate's long position.| 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 |
| Franklin Moderate vs. American Balanced Fund | Franklin Moderate vs. American Balanced Fund | Franklin Moderate vs. HUMANA INC | Franklin Moderate vs. Aquagold International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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