Correlation Between Templeton Foreign and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin Strategic 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 Strategic 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 Strategic Income, you can compare the effects of market volatilities on Templeton Foreign and Franklin Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Strategic.
Diversification Opportunities for Templeton Foreign and Franklin Strategic
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Income has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin Strategic go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Strategic
Assuming the 90 days horizon Templeton Foreign Fund is expected to generate 3.91 times more return on investment than Franklin Strategic. However, Templeton Foreign is 3.91 times more volatile than Franklin Strategic Income. It trades about 0.04 of its potential returns per unit of risk. Franklin Strategic Income is currently generating about 0.09 per unit of risk. If you would invest 680.00 in Templeton Foreign Fund on August 26, 2024 and sell it today you would earn a total of 124.00 from holding Templeton Foreign Fund or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Strategic Income
Performance |
| Timeline |
| Templeton Foreign |
| Franklin Strategic Income |
Templeton Foreign and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin Strategic
The main advantage of trading using opposite Templeton Foreign and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin Strategic 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 Strategic will offset losses from the drop in Franklin Strategic'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 Strategic vs. Franklin Mutual Beacon | Franklin Strategic vs. Templeton Developing Markets | Franklin Strategic vs. Franklin Mutual Global | Franklin Strategic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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