Correlation Between MFS Municipal and Franklin Templeton

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

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

Diversification Opportunities for MFS Municipal and Franklin Templeton

0.7

Correlation Coefficient

MFS Municipal  Franklin Templeton

Poor diversification

The 3 months correlation between MFS and Franklin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MFS Municipal Income and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton and MFS Municipal 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 MFS Municipal Income are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of MFS Municipal i.e., MFS Municipal and Franklin Templeton go up and down completely randomly.

Pair Corralation between MFS Municipal and Franklin Templeton

Considering the 90-day investment horizon MFS Municipal Income is expected to generate 1.94 times more return on investment than Franklin Templeton. However, MFS Municipal is 1.94 times more volatile than Franklin Templeton Limited. It trades about 0.18 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.02 per unit of risk. If you would invest  500.00  in MFS Municipal Income on July 19, 2025 and sell it today you would earn a total of  39.00  from holding MFS Municipal Income or generate 7.8% return on investment over 90 days.

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

MFS Municipal Income  vs.  Franklin Templeton Limited

MFS Municipal Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Municipal Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, MFS Municipal may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Franklin Templeton

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 1 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MFS Municipal and Franklin Templeton

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

The idea behind MFS Municipal Income and Franklin Templeton Limited 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 Stocks Directory module to find actively traded stocks across global markets.