Correlation Between Templeton Foreign and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Franklin Natural 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 Templeton Foreign and Franklin Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Foreign Fund and Franklin Natural Resources, you can compare the effects of market volatilities on Templeton Foreign and Franklin Natural 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 Templeton Foreign with a short position of Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Franklin Natural.
Diversification Opportunities for Templeton Foreign and Franklin Natural
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Templeton and Franklin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res and Templeton Foreign 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 Templeton Foreign Fund are associated (or correlated) with Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Franklin Natural go up and down completely randomly.
Pair Corralation between Templeton Foreign and Franklin Natural
Assuming the 90 days horizon Templeton Foreign Fund is expected to generate 0.94 times more return on investment than Franklin Natural. However, Templeton Foreign Fund is 1.07 times less risky than Franklin Natural. It trades about 0.18 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.13 per unit of risk. If you would invest 774.00 in Templeton Foreign Fund on December 25, 2024 and sell it today you would earn a total of 85.00 from holding Templeton Foreign Fund or generate 10.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Templeton Foreign Fund vs. Franklin Natural Resources
Performance |
Timeline |
Templeton Foreign |
Franklin Natural Res |
Templeton Foreign and Franklin Natural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Templeton Foreign and Franklin Natural
The main advantage of trading using opposite Templeton Foreign and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.Templeton Foreign vs. Tweedy Browne Global | Templeton Foreign vs. Legg Mason Global | Templeton Foreign vs. Morgan Stanley Global | Templeton Foreign vs. The Hartford Global |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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