Correlation Between Blackrock Health and Franklin Templeton

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

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

Diversification Opportunities for Blackrock Health and Franklin Templeton

0.63

Correlation Coefficient

Blackrock Health  Franklin Templeton

Poor diversification

The 3 months correlation between Blackrock and Franklin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Franklin Templeton Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Blackrock Health 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 Blackrock Health Sciences 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 Blackrock Health i.e., Blackrock Health and Franklin Templeton go up and down completely randomly.

Pair Corralation between Blackrock Health and Franklin Templeton

Assuming the 90 days horizon Blackrock Health Sciences is expected to generate 4.55 times more return on investment than Franklin Templeton. However, Blackrock Health is 4.55 times more volatile than Franklin Templeton Multi Asset. It trades about 0.24 of its potential returns per unit of risk. Franklin Templeton Multi Asset is currently generating about 0.13 per unit of risk. If you would invest  6,089  in Blackrock Health Sciences on October 24, 2024 and sell it today you would earn a total of  211.00  from holding Blackrock Health Sciences or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Blackrock Health Sciences  vs.  Franklin Templeton Multi Asset

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Franklin Templeton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Templeton Multi Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Health and Franklin Templeton

The main advantage of trading using opposite Blackrock Health and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Health 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 Blackrock Health Sciences and Franklin Templeton Multi Asset 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.