Correlation Between Cardano and Franklin Templeton

Can any of the company-specific risk be diversified away by investing in both Cardano and Franklin Templeton 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 Cardano and Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardano and Franklin Templeton Investments, you can compare the effects of market volatilities on Cardano and Franklin Templeton 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 Cardano with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Franklin Templeton.

Diversification Opportunities for Cardano and Franklin Templeton

-0.07

Correlation Coefficient

Cardano  Franklin Templeton

Good diversification

The 3 months correlation between Cardano and Franklin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Franklin Templeton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Cardano 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 Cardano are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of Cardano i.e., Cardano and Franklin Templeton go up and down completely randomly.

Pair Corralation between Cardano and Franklin Templeton

Assuming the 90 days trading horizon Cardano is expected to generate 30.79 times more return on investment than Franklin Templeton. However, Cardano is 30.79 times more volatile than Franklin Templeton Investments. It trades about 0.25 of its potential returns per unit of risk. Franklin Templeton Investments is currently generating about 0.18 per unit of risk. If you would invest  35.00  in Cardano on October 11, 2024 and sell it today you would earn a total of  60.00  from holding Cardano or generate 171.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	33.33%
Values	Daily Returns

Cardano  vs.  Franklin Templeton Investments

Cardano

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

Franklin Templeton

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Franklin Templeton Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Franklin Templeton is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cardano and Franklin Templeton

The main advantage of trading using opposite Cardano and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Franklin Templeton 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 Templeton will offset losses from the drop in Franklin Templeton's long position.

The idea behind Cardano and Franklin Templeton Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.