Correlation Between Templeton World and Franklin New
Can any of the company-specific risk be diversified away by investing in both Templeton World and Franklin New 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 World and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Franklin New York, you can compare the effects of market volatilities on Templeton World and Franklin New 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 World with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Franklin New.
Diversification Opportunities for Templeton World and Franklin New
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Franklin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Templeton World 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 World Fund are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Templeton World i.e., Templeton World and Franklin New go up and down completely randomly.
Pair Corralation between Templeton World and Franklin New
Assuming the 90 days horizon Templeton World is expected to generate 1.62 times less return on investment than Franklin New. In addition to that, Templeton World is 3.7 times more volatile than Franklin New York. It trades about 0.04 of its total potential returns per unit of risk. Franklin New York is currently generating about 0.22 per unit of volatility. If you would invest 1,073 in Franklin New York on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Franklin New York or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Franklin New York
Performance |
| Timeline |
| Templeton World |
| Franklin New York |
Templeton World and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Franklin New
The main advantage of trading using opposite Templeton World and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Franklin New 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 New will offset losses from the drop in Franklin New's long position.| Templeton World vs. Siit High Yield | Templeton World vs. Multimanager Lifestyle Aggressive | Templeton World vs. Morningstar Aggressive Growth | Templeton World vs. Vanguard High Yield Tax Exempt |
| Franklin New vs. Franklin Mutual Beacon | Franklin New vs. Templeton Developing Markets | Franklin New vs. Franklin Mutual Global | Franklin New vs. Franklin Mutual Global |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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