Correlation Between Templeton Foreign and Franklin International
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin International 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 International 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 International Core, you can compare the effects of market volatilities on Templeton Foreign and Franklin International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin International.
Diversification Opportunities for Templeton Foreign and Franklin International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and Franklin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin International go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin International
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Franklin International. In addition to that, Templeton Foreign is 1.39 times more volatile than Franklin International Core. It trades about -0.15 of its total potential returns per unit of risk. Franklin International Core is currently generating about -0.2 per unit of volatility. If you would invest 1,228 in Franklin International Core on August 29, 2024 and sell it today you would lose (42.00) from holding Franklin International Core or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin International Core
Performance |
| Timeline |
| Templeton Foreign |
| Franklin International |
Templeton Foreign and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin International
The main advantage of trading using opposite Templeton Foreign and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin International 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 International will offset losses from the drop in Franklin International's long position.| Templeton Foreign vs. Ab Value Fund | Templeton Foreign vs. Barings Active Short | Templeton Foreign vs. Qs Growth Fund | Templeton Foreign vs. Nasdaq 100 Index Fund |
| Franklin International vs. Gamco Natural Resources | Franklin International vs. Hennessy Bp Energy | Franklin International vs. Calvert Global Energy | Franklin International vs. Energy Services Fund |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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