Correlation Between Strategic Income and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Strategic Income and Templeton Emerging 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 Strategic Income and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Income Fund and Templeton Emerging Markets, you can compare the effects of market volatilities on Strategic Income and Templeton Emerging 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 Strategic Income with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Income and Templeton Emerging.
Diversification Opportunities for Strategic Income and Templeton Emerging
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategic and Templeton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Income Fund and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Strategic Income 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 Strategic Income Fund are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Strategic Income i.e., Strategic Income and Templeton Emerging go up and down completely randomly.
Pair Corralation between Strategic Income and Templeton Emerging
Assuming the 90 days horizon Strategic Income is expected to generate 1.4 times less return on investment than Templeton Emerging. But when comparing it to its historical volatility, Strategic Income Fund is 2.23 times less risky than Templeton Emerging. It trades about 0.07 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,192 in Templeton Emerging Markets on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Templeton Emerging Markets or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Income Fund vs. Templeton Emerging Markets
Performance |
| Timeline |
| Strategic Income |
| Templeton Emerging |
Strategic Income and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Income and Templeton Emerging
The main advantage of trading using opposite Strategic Income and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Income position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's long position.| Strategic Income vs. Rbc Emerging Markets | Strategic Income vs. Mondrian Emerging Markets | Strategic Income vs. Commodities Strategy Fund | Strategic Income vs. Templeton Emerging Markets |
| Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Templeton Growth Fund | Templeton Emerging vs. Franklin Real Estate | Templeton Emerging vs. HUMANA INC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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