Correlation Between TPG and Franklin Resources
Can any of the company-specific risk be diversified away by investing in both TPG and Franklin Resources 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 TPG and Franklin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Inc and Franklin Resources, you can compare the effects of market volatilities on TPG and Franklin Resources 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 TPG with a short position of Franklin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG and Franklin Resources.
Diversification Opportunities for TPG and Franklin Resources
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TPG and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources and TPG 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 TPG Inc are associated (or correlated) with Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of TPG i.e., TPG and Franklin Resources go up and down completely randomly.
Pair Corralation between TPG and Franklin Resources
Considering the 90-day investment horizon TPG Inc is expected to generate 1.16 times more return on investment than Franklin Resources. However, TPG is 1.16 times more volatile than Franklin Resources. It trades about 0.09 of its potential returns per unit of risk. Franklin Resources is currently generating about 0.0 per unit of risk. If you would invest 2,944 in TPG Inc on August 30, 2024 and sell it today you would earn a total of 4,037 from holding TPG Inc or generate 137.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Inc vs. Franklin Resources
Performance |
| Timeline |
| TPG Inc |
| Franklin Resources |
TPG and Franklin Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG and Franklin Resources
The main advantage of trading using opposite TPG and Franklin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG position performs unexpectedly, Franklin Resources 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 Resources will offset losses from the drop in Franklin Resources' long position.| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment Corp |
| Franklin Resources vs. TPG Inc | Franklin Resources vs. Carlyle Secured Lending | Franklin Resources vs. Brookfield Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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