Correlation Between Financial and Franklin Templeton

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

By analyzing existing cross correlation between Financial 15 Split and Franklin Templeton Limited, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Franklin Templeton.

Diversification Opportunities for Financial and Franklin Templeton

-0.05

Correlation Coefficient

Financial  Franklin Templeton

Good diversification

The 3 months correlation between Financial and Franklin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and Financial 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 Financial 15 Split 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 Financial i.e., Financial and Franklin Templeton go up and down completely randomly.

Pair Corralation between Financial and Franklin Templeton

Assuming the 90 days horizon Financial 15 Split is expected to generate 3.7 times more return on investment than Franklin Templeton. However, Financial is 3.7 times more volatile than Franklin Templeton Limited. It trades about 0.16 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.08 per unit of risk. If you would invest  623.00  in Financial 15 Split on September 3, 2024 and sell it today you would earn a total of  105.00  from holding Financial 15 Split or generate 16.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Financial 15 Split  vs.  Franklin Templeton Limited

Financial 15 Split

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Franklin Templeton

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 6 (%) 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 Financial and Franklin Templeton

The main advantage of trading using opposite Financial and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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 Financial 15 Split 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.