Correlation Between Templeton Foreign and Franklin Income
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin Income 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 Foreign and Franklin Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Foreign Fund and Franklin Income Fund, you can compare the effects of market volatilities on Templeton Foreign and Franklin Income 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 Foreign with a short position of Franklin Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Income.
Diversification Opportunities for Templeton Foreign and Franklin Income
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Templeton and Franklin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Income and Templeton Foreign 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 Foreign Fund are associated (or correlated) with Franklin Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Income has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin Income go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Income
Assuming the 90 days horizon Templeton Foreign Fund is expected to generate 2.33 times more return on investment than Franklin Income. However, Templeton Foreign is 2.33 times more volatile than Franklin Income Fund. It trades about 0.04 of its potential returns per unit of risk. Franklin Income Fund is currently generating about 0.08 per unit of risk. If you would invest 655.00 in Templeton Foreign Fund on August 27, 2024 and sell it today you would earn a total of 131.00 from holding Templeton Foreign Fund or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Income Fund
Performance |
| Timeline |
| Templeton Foreign |
| Franklin Income |
Templeton Foreign and Franklin Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin Income
The main advantage of trading using opposite Templeton Foreign and Franklin Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin Income 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 Income will offset losses from the drop in Franklin Income's long position.| Templeton Foreign vs. California High Yield Municipal | Templeton Foreign vs. Ishares Municipal Bond | Templeton Foreign vs. Ab Impact Municipal | Templeton Foreign vs. Oklahoma Municipal Fund |
| Franklin Income vs. Franklin Mutual Beacon | Franklin Income vs. Templeton Developing Markets | Franklin Income vs. Franklin Mutual Global | Franklin Income 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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