Correlation Between Ab Large and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Ab Large 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 Ab Large and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Large Cap and Templeton Growth Fund, you can compare the effects of market volatilities on Ab Large 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 Ab Large with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Large and Templeton Growth.
Diversification Opportunities for Ab Large and Templeton Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ALCKX and Templeton is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ab Large Cap and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Ab Large 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 Ab Large Cap 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 Ab Large i.e., Ab Large and Templeton Growth go up and down completely randomly.
Pair Corralation between Ab Large and Templeton Growth
Assuming the 90 days horizon Ab Large Cap is expected to under-perform the Templeton Growth. In addition to that, Ab Large is 2.18 times more volatile than Templeton Growth Fund. It trades about -0.11 of its total potential returns per unit of risk. Templeton Growth Fund is currently generating about -0.17 per unit of volatility. If you would invest 2,804 in Templeton Growth Fund on October 11, 2024 and sell it today you would lose (131.00) from holding Templeton Growth Fund or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Large Cap vs. Templeton Growth Fund
Performance |
| Timeline |
| Ab Large Cap |
| Templeton Growth |
Ab Large and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Large and Templeton Growth
The main advantage of trading using opposite Ab Large and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Large 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.| Ab Large vs. Ab Large Cap | Ab Large vs. Select Fund R6 | Ab Large vs. Ab Large Cap | Ab Large vs. Ab Large Cap |
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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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