Correlation Between Templeton World and Franklin Moderate
Can any of the company-specific risk be diversified away by investing in both Templeton World and Franklin Moderate 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 World and Franklin Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Franklin Moderate Allocation, you can compare the effects of market volatilities on Templeton World and Franklin Moderate 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 World with a short position of Franklin Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Franklin Moderate.
Diversification Opportunities for Templeton World and Franklin Moderate
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate and Templeton World 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 World Fund are associated (or correlated) with Franklin Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Templeton World i.e., Templeton World and Franklin Moderate go up and down completely randomly.
Pair Corralation between Templeton World and Franklin Moderate
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.68 times more return on investment than Franklin Moderate. However, Templeton World is 1.68 times more volatile than Franklin Moderate Allocation. It trades about 0.02 of its potential returns per unit of risk. Franklin Moderate Allocation is currently generating about 0.0 per unit of risk. If you would invest 1,697 in Templeton World Fund on December 25, 2024 and sell it today you would earn a total of 15.00 from holding Templeton World Fund or generate 0.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
Templeton World Fund vs. Franklin Moderate Allocation
Performance |
Timeline |
Templeton World |
Franklin Moderate |
Templeton World and Franklin Moderate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Templeton World and Franklin Moderate
The main advantage of trading using opposite Templeton World and Franklin Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Franklin Moderate 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 Moderate will offset losses from the drop in Franklin Moderate's long position.Templeton World vs. Health Biotchnology Portfolio | Templeton World vs. Dreyfus Technology Growth | Templeton World vs. Specialized Technology Fund | Templeton World vs. Wells Fargo Specialized |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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