Correlation Between New Perspective and Templeton Global
Can any of the company-specific risk be diversified away by investing in both New Perspective and Templeton Global 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 New Perspective and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Templeton Global AD, you can compare the effects of market volatilities on New Perspective and Templeton Global 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 New Perspective with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Templeton Global.
Diversification Opportunities for New Perspective and Templeton Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Templeton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Templeton Global AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global and New Perspective 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 New Perspective Fund are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global has no effect on the direction of New Perspective i.e., New Perspective and Templeton Global go up and down completely randomly.
Pair Corralation between New Perspective and Templeton Global
Assuming the 90 days horizon New Perspective is expected to generate 6.74 times less return on investment than Templeton Global. But when comparing it to its historical volatility, New Perspective Fund is 1.21 times less risky than Templeton Global. It trades about 0.05 of its potential returns per unit of risk. Templeton Global AD is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,913 in Templeton Global AD on October 23, 2024 and sell it today you would earn a total of 111.00 from holding Templeton Global AD or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.89% |
| Values | Daily Returns |
New Perspective Fund vs. Templeton Global AD
Performance |
| Timeline |
| New Perspective |
| Templeton Global |
New Perspective and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Templeton Global
The main advantage of trading using opposite New Perspective and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.| New Perspective vs. Growth Fund Of | New Perspective vs. American Funds Fundamental | New Perspective vs. Investment Of America | New Perspective vs. Smallcap World Fund |
| Templeton Global vs. Azvalor Global Value | Templeton Global vs. JPM Global Natural | Templeton Global vs. Cobas Global PP | Templeton Global vs. JPMF Global Natural |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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