Correlation Between Templeton Growth and Franklin Growth
Can any of the company-specific risk be diversified away by investing in both Templeton Growth and Franklin Growth 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 Growth and Franklin Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Growth Fund and Franklin Growth Opportunities, you can compare the effects of market volatilities on Templeton Growth and Franklin Growth 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 Growth with a short position of Franklin Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Franklin Growth.
Diversification Opportunities for Templeton Growth and Franklin Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Franklin Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth Oppo and Templeton Growth 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 Growth Fund are associated (or correlated) with Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth Oppo has no effect on the direction of Templeton Growth i.e., Templeton Growth and Franklin Growth go up and down completely randomly.
Pair Corralation between Templeton Growth and Franklin Growth
Assuming the 90 days horizon Templeton Growth is expected to generate 1.82 times less return on investment than Franklin Growth. But when comparing it to its historical volatility, Templeton Growth Fund is 1.64 times less risky than Franklin Growth. It trades about 0.05 of its potential returns per unit of risk. Franklin Growth Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,262 in Franklin Growth Opportunities on October 27, 2024 and sell it today you would earn a total of 1,660 from holding Franklin Growth Opportunities or generate 38.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Growth Fund vs. Franklin Growth Opportunities
Performance |
| Timeline |
| Templeton Growth |
| Franklin Growth Oppo |
Templeton Growth and Franklin Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Franklin Growth
The main advantage of trading using opposite Templeton Growth and Franklin Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth position performs unexpectedly, Franklin Growth 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 Growth will offset losses from the drop in Franklin Growth's long position.| Templeton Growth vs. T Rowe Price | Templeton Growth vs. Guidemark Large Cap | Templeton Growth vs. Rational Strategic Allocation | Templeton Growth vs. Oppenheimer Global Allocation |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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