Correlation Between Templeton Global and Franklin California
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Franklin California 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 Global and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Bond and Franklin California Tax Free, you can compare the effects of market volatilities on Templeton Global and Franklin California 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 Global with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Franklin California.
Diversification Opportunities for Templeton Global and Franklin California
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax and Templeton Global 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 Global Bond are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Templeton Global i.e., Templeton Global and Franklin California go up and down completely randomly.
Pair Corralation between Templeton Global and Franklin California
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Franklin California. In addition to that, Templeton Global is 2.03 times more volatile than Franklin California Tax Free. It trades about -0.01 of its total potential returns per unit of risk. Franklin California Tax Free is currently generating about 0.07 per unit of volatility. If you would invest 624.00 in Franklin California Tax Free on November 27, 2024 and sell it today you would earn a total of 57.00 from holding Franklin California Tax Free or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Franklin California Tax Free
Performance |
| Timeline |
| Templeton Global Bond |
| Franklin California Tax |
Templeton Global and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Franklin California
The main advantage of trading using opposite Templeton Global and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Templeton Global vs. Live Oak Health | Templeton Global vs. The Gabelli Healthcare | Templeton Global vs. Highland Longshort Healthcare | Templeton Global vs. Eaton Vance Worldwide |
| Franklin California vs. Lord Abbett Intermediate | Franklin California vs. Inverse Government Long | Franklin California vs. Pace Municipal Fixed | Franklin California vs. Franklin Adjustable Government |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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