Correlation Between Templeton World and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Templeton World and Franklin Mutual 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 Mutual 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 Mutual Beacon, you can compare the effects of market volatilities on Templeton World and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Franklin Mutual.
Diversification Opportunities for Templeton World and Franklin Mutual
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Templeton World i.e., Templeton World and Franklin Mutual go up and down completely randomly.
Pair Corralation between Templeton World and Franklin Mutual
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.21 times more return on investment than Franklin Mutual. However, Templeton World is 1.21 times more volatile than Franklin Mutual Beacon. It trades about 0.11 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.08 per unit of risk. If you would invest 1,420 in Templeton World Fund on August 26, 2024 and sell it today you would earn a total of 366.00 from holding Templeton World Fund or generate 25.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Templeton World |
| Franklin Mutual Beacon |
Templeton World and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Franklin Mutual
The main advantage of trading using opposite Templeton World and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual's long position.| Templeton World vs. Franklin Mutual Beacon | Templeton World vs. Templeton Developing Markets | Templeton World vs. Franklin Mutual Global | Templeton World vs. Franklin Mutual Global |
| Franklin Mutual vs. Franklin High Income | Franklin Mutual vs. Goldman Sachs High | Franklin Mutual vs. California High Yield Municipal | Franklin Mutual vs. Morningstar Aggressive Growth |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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