Correlation Between Franklin Templeton and Affiliated Managers

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

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

Diversification Opportunities for Franklin Templeton and Affiliated Managers

0.38

Correlation Coefficient

Franklin Templeton  Affiliated Managers

Weak diversification

The 3 months correlation between Franklin and Affiliated is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton Limited and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Franklin Templeton 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 Templeton Limited are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Affiliated Managers go up and down completely randomly.

Pair Corralation between Franklin Templeton and Affiliated Managers

Considering the 90-day investment horizon Franklin Templeton is expected to generate 13.76 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, Franklin Templeton Limited is 3.85 times less risky than Affiliated Managers. It trades about 0.03 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,990  in Affiliated Managers Group on August 7, 2024 and sell it today you would earn a total of  1,786  from holding Affiliated Managers Group or generate 11.17% return on investment over 90 days.

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

Franklin Templeton Limited  vs.  Affiliated Managers Group

Franklin Templeton

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 2 (%) 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.

Affiliated Managers

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Affiliated Managers may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Franklin Templeton and Affiliated Managers

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

The idea behind Franklin Templeton Limited and Affiliated Managers Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.