Correlation Between Templeton Growth and Franklin
Can any of the company-specific risk be diversified away by investing in both Templeton Growth and Franklin 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 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 Government Securities, you can compare the effects of market volatilities on Templeton Growth and Franklin 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Franklin.
Diversification Opportunities for Templeton Growth and Franklin
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Franklin Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government has no effect on the direction of Templeton Growth i.e., Templeton Growth and Franklin go up and down completely randomly.
Pair Corralation between Templeton Growth and Franklin
Assuming the 90 days horizon Templeton Growth Fund is expected to generate 1.75 times more return on investment than Franklin. However, Templeton Growth is 1.75 times more volatile than Franklin Government Securities. It trades about 0.05 of its potential returns per unit of risk. Franklin Government Securities is currently generating about 0.01 per unit of risk. If you would invest 2,225 in Templeton Growth Fund on October 19, 2024 and sell it today you would earn a total of 422.00 from holding Templeton Growth Fund or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Growth Fund vs. Franklin Government Securities
Performance |
| Timeline |
| Templeton Growth |
| Franklin Government |
Templeton Growth and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Franklin
The main advantage of trading using opposite Templeton Growth and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth position performs unexpectedly, Franklin 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 will offset losses from the drop in Franklin's long position.| Templeton Growth vs. Icon Information Technology | Templeton Growth vs. Invesco Technology Fund | Templeton Growth vs. Technology Ultrasector Profund | Templeton Growth vs. Pgim Jennison Technology |
| Franklin vs. Northern Small Cap | Franklin vs. Delaware Limited Term Diversified | Franklin vs. Guggenheim Diversified Income | Franklin vs. Fulcrum Diversified Absolute |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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