Correlation Between Templeton Emerging and Franklin International
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging 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 Emerging 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 Emerging Markets and Franklin International Core, you can compare the effects of market volatilities on Templeton Emerging 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 Emerging with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Franklin International.
Diversification Opportunities for Templeton Emerging 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 Emerging Markets 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 Emerging 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 Emerging Markets 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 Emerging i.e., Templeton Emerging and Franklin International go up and down completely randomly.
Pair Corralation between Templeton Emerging and Franklin International
Assuming the 90 days horizon Templeton Emerging Markets is expected to generate 0.72 times more return on investment than Franklin International. However, Templeton Emerging Markets is 1.4 times less risky than Franklin International. It trades about 0.02 of its potential returns per unit of risk. Franklin International Core is currently generating about -0.02 per unit of risk. If you would invest 1,371 in Templeton Emerging Markets on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Templeton Emerging Markets or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Franklin International Core
Performance |
| Timeline |
| Templeton Emerging |
| Franklin International |
Templeton Emerging and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Franklin International
The main advantage of trading using opposite Templeton Emerging and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging 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 Emerging vs. Mutual Of America | Templeton Emerging vs. Fidelity Small Cap | Templeton Emerging vs. Palm Valley Capital | Templeton Emerging vs. Pace Smallmedium Value |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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