Correlation Between Federated Investors and Franklin Templeton

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

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

Diversification Opportunities for Federated Investors and Franklin Templeton

-0.05

Correlation Coefficient

Federated Investors  Franklin Templeton

Good diversification

The 3 months correlation between Federated and Franklin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Federated Investors 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 Federated Investors B 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 Federated Investors i.e., Federated Investors and Franklin Templeton go up and down completely randomly.

Pair Corralation between Federated Investors and Franklin Templeton

Considering the 90-day investment horizon Federated Investors B is expected to generate 2.67 times more return on investment than Franklin Templeton. However, Federated Investors is 2.67 times more volatile than Franklin Templeton Limited. It trades about 0.34 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.12 per unit of risk. If you would invest  3,340  in Federated Investors B on September 6, 2024 and sell it today you would earn a total of  940.00  from holding Federated Investors B or generate 28.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Federated Investors B  vs.  Franklin Templeton Limited

Federated Investors

Risk-Adjusted Performance

27 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Franklin Templeton

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Federated Investors and Franklin Templeton

The main advantage of trading using opposite Federated Investors and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Investors 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 Federated Investors B and Franklin Templeton Limited 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.