Correlation Between Franklin Mutual and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and Templeton Foreign 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 Franklin Mutual and Templeton Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Shares and Templeton Foreign Fund, you can compare the effects of market volatilities on Franklin Mutual and Templeton Foreign 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 Franklin Mutual with a short position of Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Templeton Foreign.
Diversification Opportunities for Franklin Mutual and Templeton Foreign
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Templeton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Franklin Mutual 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 Franklin Mutual Shares are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Templeton Foreign go up and down completely randomly.
Pair Corralation between Franklin Mutual and Templeton Foreign
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.85 times more return on investment than Templeton Foreign. However, Franklin Mutual Shares is 1.18 times less risky than Templeton Foreign. It trades about 0.03 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.02 per unit of risk. If you would invest 2,305 in Franklin Mutual Shares on October 19, 2024 and sell it today you would earn a total of 213.00 from holding Franklin Mutual Shares or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Shares vs. Templeton Foreign Fund
Performance |
| Timeline |
| Franklin Mutual Shares |
| Templeton Foreign |
Franklin Mutual and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Templeton Foreign
The main advantage of trading using opposite Franklin Mutual and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.| Franklin Mutual vs. Franklin Income Fund | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund | Franklin Mutual vs. Templeton Growth Fund |
| Templeton Foreign vs. Short Term Bond Fund | Templeton Foreign vs. Leader Short Term Bond | Templeton Foreign vs. Cmg Ultra Short | Templeton Foreign vs. Siit Ultra Short |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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