Correlation Between Franklin Templeton and American Century
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton and American Century 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 Templeton and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and American Century STOXX, you can compare the effects of market volatilities on Franklin Templeton and American Century 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 Templeton with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and American Century.
Diversification Opportunities for Franklin Templeton and American Century
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and American Century STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century STOXX and Franklin Templeton 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 Templeton ETF are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century STOXX has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and American Century go up and down completely randomly.
Pair Corralation between Franklin Templeton and American Century
Given the investment horizon of 90 days Franklin Templeton ETF is expected to generate 1.27 times more return on investment than American Century. However, Franklin Templeton is 1.27 times more volatile than American Century STOXX. It trades about 0.11 of its potential returns per unit of risk. American Century STOXX is currently generating about 0.12 per unit of risk. If you would invest 4,990 in Franklin Templeton ETF on November 1, 2024 and sell it today you would earn a total of 296.00 from holding Franklin Templeton ETF or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Templeton ETF vs. American Century STOXX
Performance |
| Timeline |
| Franklin Templeton ETF |
| American Century STOXX |
Franklin Templeton and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and American Century
The main advantage of trading using opposite Franklin Templeton and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. WisdomTree Multifactor | Franklin Templeton vs. American Century STOXX | Franklin Templeton vs. Vanguard Quality Factor |
| American Century vs. American Century Quality | American Century vs. Invesco SP 500 | American Century vs. American Century Diversified | American Century vs. Invesco SP SmallCap |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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