Correlation Between Capital World and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Bond and Templeton Global Bond, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Templeton Global.
Diversification Opportunities for Capital World and Templeton Global
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Capital and Templeton is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Bond and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Capital World 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 Capital World Bond 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 Bond has no effect on the direction of Capital World i.e., Capital World and Templeton Global go up and down completely randomly.
Pair Corralation between Capital World and Templeton Global
Assuming the 90 days horizon Capital World Bond is expected to generate 0.6 times more return on investment than Templeton Global. However, Capital World Bond is 1.68 times less risky than Templeton Global. It trades about -0.1 of its potential returns per unit of risk. Templeton Global Bond is currently generating about -0.1 per unit of risk. If you would invest 1,619 in Capital World Bond on August 28, 2024 and sell it today you would lose (14.00) from holding Capital World Bond or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Bond vs. Templeton Global Bond
Performance |
| Timeline |
| Capital World Bond |
| Templeton Global Bond |
Capital World and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Templeton Global
The main advantage of trading using opposite Capital World and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Goehring Rozencwajg Resources | Capital World vs. Hennessy Bp Energy | Capital World vs. Short Oil Gas | Capital World vs. Jennison Natural Resources |
| Templeton Global vs. Ms Global Fixed | Templeton Global vs. Barings Global Floating | Templeton Global vs. Nuveen Global Real | Templeton Global vs. Dreyfusstandish Global Fixed |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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