Correlation Between Templeton Foreign and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Templeton Foreign and Franklin Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Equity.
Diversification Opportunities for Templeton Foreign and Franklin Equity
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and FRANKLIN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin Equity go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Equity
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Franklin Equity. In addition to that, Templeton Foreign is 1.43 times more volatile than Franklin Equity Income. It trades about -0.19 of its total potential returns per unit of risk. Franklin Equity Income is currently generating about 0.2 per unit of volatility. If you would invest 3,478 in Franklin Equity Income on August 29, 2024 and sell it today you would earn a total of 119.00 from holding Franklin Equity Income or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Equity Income
Performance |
| Timeline |
| Templeton Foreign |
| Franklin Equity Income |
Templeton Foreign and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin Equity
The main advantage of trading using opposite Templeton Foreign and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Templeton Foreign vs. Franklin Mutual Beacon | Templeton Foreign vs. Templeton Developing Markets | Templeton Foreign vs. Franklin Mutual Global | Templeton Foreign vs. Franklin Mutual Global |
| Franklin Equity vs. Franklin Growth Fund | Franklin Equity vs. Franklin Total Return | Franklin Equity vs. Franklin Rising Dividends | Franklin Equity vs. Franklin Strategic Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |