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 Investments and American Century ETF, 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

-0.44

Correlation Coefficient

Franklin Templeton  American Century

Very good diversification

The 3 months correlation between Franklin and American is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Investments and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 Investments 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 ETF 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

If you would invest  3,808  in Franklin Templeton Investments on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Franklin Templeton Investments or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Franklin Templeton Investments  vs.  American Century ETF

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.

American Century ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Century ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, American Century 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 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.

The idea behind Franklin Templeton Investments and American Century ETF 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 Stocks Directory module to find actively traded stocks across global markets.