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
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Franklin is 0.03. 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 2.06 times more return on investment than Franklin Templeton. However, Federated Investors is 2.06 times more volatile than Franklin Templeton Limited. It trades about 0.11 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 3,084 in Federated Investors B on September 8, 2024 and sell it today you would earn a total of 1,195 from holding Federated Investors B or generate 38.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Investors B vs. Franklin Templeton Limited
Performance |
Timeline |
Federated Investors |
Franklin Templeton |
Federated Investors and Franklin Templeton Volatility Contrast
Predicted Return Density |
Returns |
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.Federated Investors vs. Blackrock Muniholdings Closed | Federated Investors vs. DTF Tax Free | Federated Investors vs. John Hancock Income | Federated Investors vs. MFS Investment Grade |
Franklin Templeton vs. MFS Investment Grade | Franklin Templeton vs. Blackrock Muniholdings Closed | Franklin Templeton vs. DTF Tax Free | Franklin Templeton vs. John Hancock Income |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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