Correlation Between Templeton Emerging and Franklin Equity
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Franklin Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Templeton Emerging and Franklin Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Franklin Equity.
Diversification Opportunities for Templeton Emerging and Franklin Equity
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and FRANKLIN is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Franklin Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Equity Income has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Franklin Equity go up and down completely randomly.
Pair Corralation between Templeton Emerging and Franklin Equity
Assuming the 90 days horizon Templeton Emerging Markets is expected to under-perform the Franklin Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Emerging Markets is 1.56 times less risky than Franklin Equity. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Franklin Equity Income is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,478 in Franklin Equity Income on August 29, 2024 and sell it today you would earn a total of 119.00 from holding Franklin Equity Income or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Franklin Equity Income
Performance |
| Timeline |
| Templeton Emerging |
| Franklin Equity Income |
Templeton Emerging and Franklin Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Franklin Equity
The main advantage of trading using opposite Templeton Emerging and Franklin Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Franklin Equity 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 Equity will offset losses from the drop in Franklin Equity's long position.| Templeton Emerging vs. Goldman Sachs Financial | Templeton Emerging vs. Gabelli Global Financial | Templeton Emerging vs. Icon Financial Fund | Templeton Emerging vs. Blackrock Financial Institutions |
| Franklin Equity vs. Franklin Growth Fund | Franklin Equity vs. Franklin Total Return | Franklin Equity vs. Franklin Rising Dividends | Franklin Equity vs. Franklin Strategic Income |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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