Correlation Between Franklin Mutual and Templeton Growth

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

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

Diversification Opportunities for Franklin Mutual and Templeton Growth

0.49

Correlation Coefficient

Franklin Mutual  Templeton Growth

Very weak diversification

The 3 months correlation between Franklin and Templeton is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth 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 Shares are associated (or correlated) with Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and Templeton Growth go up and down completely randomly.

Pair Corralation between Franklin Mutual and Templeton Growth

Assuming the 90 days horizon Franklin Mutual is expected to generate 1.23 times less return on investment than Templeton Growth. In addition to that, Franklin Mutual is 1.08 times more volatile than Templeton Growth Fund. It trades about 0.05 of its total potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest  2,181  in Templeton Growth Fund on September 3, 2024 and sell it today you would earn a total of  622.00  from holding Templeton Growth Fund or generate 28.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Mutual Shares  vs.  Templeton Growth Fund

Franklin Mutual Shares

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mutual Shares are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Franklin Mutual may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Templeton Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Growth Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Templeton Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Mutual and Templeton Growth

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

The idea behind Franklin Mutual Shares and Templeton Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.