Correlation Between Templeton Foreign and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin Templeton 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 Templeton 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 Templeton Smacs, you can compare the effects of market volatilities on Templeton Foreign and Franklin Templeton 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 Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Templeton.
Diversification Opportunities for Templeton Foreign and Franklin Templeton
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin Templeton Smacs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton Smacs 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 Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton Smacs has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin Templeton go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Templeton
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Franklin Templeton. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Foreign Fund is 1.06 times less risky than Franklin Templeton. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Franklin Templeton Smacs is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Franklin Templeton Smacs on August 28, 2024 and sell it today you would lose (28.00) from holding Franklin Templeton Smacs or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Templeton Smacs
Performance |
| Timeline |
| Templeton Foreign |
| Franklin Templeton Smacs |
Templeton Foreign and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Franklin Templeton
The main advantage of trading using opposite Templeton Foreign and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.| Templeton Foreign vs. Franklin Mutual Beacon | Templeton Foreign vs. Templeton Developing Markets | Templeton Foreign vs. Franklin Mutual Global | Templeton Foreign vs. Franklin Mutual Global |
| Franklin Templeton vs. Templeton Foreign Fund | Franklin Templeton vs. Franklin Mutual Global | Franklin Templeton vs. Franklin Small Mid Cap | Franklin Templeton vs. Franklin Real Estate |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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