Correlation Between Templeton Developing and Franklin Michigan
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin Michigan 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 Michigan 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 Michigan Tax Free, you can compare the effects of market volatilities on Templeton Developing and Franklin Michigan 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 Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin Michigan.
Diversification Opportunities for Templeton Developing and Franklin Michigan
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Templeton and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin Michigan Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Michigan Tax 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 Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Michigan Tax has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin Michigan go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin Michigan
Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Franklin Michigan. In addition to that, Templeton Developing is 3.23 times more volatile than Franklin Michigan Tax Free. It trades about -0.08 of its total potential returns per unit of risk. Franklin Michigan Tax Free is currently generating about 0.19 per unit of volatility. If you would invest 1,067 in Franklin Michigan Tax Free on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Franklin Michigan Tax Free or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Developing Markets vs. Franklin Michigan Tax Free
Performance |
| Timeline |
| Templeton Developing |
| Franklin Michigan Tax |
Templeton Developing and Franklin Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin Michigan
The main advantage of trading using opposite Templeton Developing and Franklin Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin Michigan 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 Michigan will offset losses from the drop in Franklin Michigan'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 Michigan vs. Franklin Mutual Beacon | Franklin Michigan vs. Templeton Developing Markets | Franklin Michigan vs. Franklin Mutual Global | Franklin Michigan 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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