Correlation Between Templeton Foreign and Franklin Small-mid
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign 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 Foreign 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 Foreign Fund and Franklin Small Mid Cap, you can compare the effects of market volatilities on Templeton Foreign 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 Foreign with a short position of Franklin Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Small-mid.
Diversification Opportunities for Templeton Foreign and Franklin Small-mid
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Franklin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund 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 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 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 Foreign i.e., Templeton Foreign and Franklin Small-mid go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Small-mid
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Franklin Small-mid. In addition to that, Templeton Foreign is 1.01 times more volatile than Franklin Small Mid Cap. It trades about -0.17 of its total potential returns per unit of risk. Franklin Small Mid Cap is currently generating about 0.27 per unit of volatility. If you would invest 4,487 in Franklin Small Mid Cap on August 29, 2024 and sell it today you would earn a total of 481.00 from holding Franklin Small Mid Cap or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Small Mid Cap
Performance |
| Timeline |
| Templeton Foreign |
| Franklin Small Mid |
Templeton Foreign and Franklin Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin Small-mid
The main advantage of trading using opposite Templeton Foreign and Franklin Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign 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 Foreign vs. Victory High Income | Templeton Foreign vs. Ppm High Yield | Templeton Foreign vs. Morningstar Aggressive Growth | Templeton Foreign vs. Artisan High Income |
| Franklin Small-mid vs. Federated Emerging Market | Franklin Small-mid vs. Arrow Managed Futures | Franklin Small-mid vs. Rbc Emerging Markets | Franklin Small-mid vs. T Rowe Price |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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