Correlation Between Franklin Mutual and Templeton Foreign

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

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

Diversification Opportunities for Franklin Mutual and Templeton Foreign

0.85

Correlation Coefficient

Franklin Mutual  Templeton Foreign

Very poor diversification

The 3 months correlation between Franklin and Templeton is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Financial and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Franklin Mutual 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 Franklin Mutual Financial are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Templeton Foreign go up and down completely randomly.

Pair Corralation between Franklin Mutual and Templeton Foreign

Assuming the 90 days horizon Franklin Mutual Financial is expected to generate 1.1 times more return on investment than Templeton Foreign. However, Franklin Mutual is 1.1 times more volatile than Templeton Foreign Fund. It trades about 0.06 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.05 per unit of risk. If you would invest  2,396  in Franklin Mutual Financial on February 5, 2024 and sell it today you would earn a total of  448.00  from holding Franklin Mutual Financial or generate 18.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.49%
Values	Daily Returns

Franklin Mutual Financial  vs.  Templeton Foreign Fund

Franklin Mutual Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Financial are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Franklin Mutual may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Templeton Foreign

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Foreign Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Templeton Foreign may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Franklin Mutual and Templeton Foreign

The main advantage of trading using opposite Franklin Mutual and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.

The idea behind Franklin Mutual Financial and Templeton Foreign Fund 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.