Correlation Between Templeton Developing and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Franklin Small-mid 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 Small-mid 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 Small Mid Cap, you can compare the effects of market volatilities on Templeton Developing and Franklin Small-mid 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 Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Franklin Small-mid.
Diversification Opportunities for Templeton Developing and Franklin Small-mid
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Templeton and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid 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 Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Mid has no effect on the direction of Templeton Developing i.e., Templeton Developing and Franklin Small-mid go up and down completely randomly.
Pair Corralation between Templeton Developing and Franklin Small-mid
Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Franklin Small-mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Developing Markets is 1.12 times less risky than Franklin Small-mid. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Franklin Small Mid Cap is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,570 in Franklin Small Mid Cap on August 29, 2024 and sell it today you would earn a total of 398.00 from holding Franklin Small Mid Cap or generate 8.71% return on investment 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 Small Mid Cap
Performance |
| Timeline |
| Templeton Developing |
| Franklin Small Mid |
Templeton Developing and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Franklin Small-mid
The main advantage of trading using opposite Templeton Developing and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Franklin Small-mid 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 Small-mid will offset losses from the drop in Franklin Small-mid'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 Small-mid vs. Scharf Global Opportunity | Franklin Small-mid vs. Vanguard Global Credit | Franklin Small-mid vs. Morgan Stanley Global | Franklin Small-mid vs. Kinetics Global Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |