Correlation Between Templeton Developing and Franklin New
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin New 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 New 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 New Jersey, you can compare the effects of market volatilities on Templeton Developing and Franklin New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin New.
Diversification Opportunities for Templeton Developing and Franklin New
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Templeton and Franklin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New Jersey 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New Jersey has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin New go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin New
Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Franklin New. In addition to that, Templeton Developing is 4.32 times more volatile than Franklin New Jersey. It trades about -0.07 of its total potential returns per unit of risk. Franklin New Jersey is currently generating about -0.03 per unit of volatility. If you would invest 1,043 in Franklin New Jersey on August 25, 2024 and sell it today you would lose (4.00) from holding Franklin New Jersey or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Franklin New Jersey
Performance |
| Timeline |
| Templeton Developing |
| Franklin New Jersey |
Templeton Developing and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin New
The main advantage of trading using opposite Templeton Developing and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's 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 New vs. Franklin Mutual Beacon | Franklin New vs. Templeton Developing Markets | Franklin New vs. Franklin Mutual Global | Franklin New vs. Franklin Mutual Global |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |