Correlation Between Templeton China and Holbrook Income
Can any of the company-specific risk be diversified away by investing in both Templeton China and Holbrook Income 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 Templeton China and Holbrook Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton China World and Holbrook Income, you can compare the effects of market volatilities on Templeton China and Holbrook Income 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 Templeton China with a short position of Holbrook Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton China and Holbrook Income.
Diversification Opportunities for Templeton China and Holbrook Income
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and Holbrook is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Templeton China World and Holbrook Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holbrook Income and Templeton China 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 Templeton China World are associated (or correlated) with Holbrook Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holbrook Income has no effect on the direction of Templeton China i.e., Templeton China and Holbrook Income go up and down completely randomly.
Pair Corralation between Templeton China and Holbrook Income
If you would invest 958.00 in Holbrook Income on September 3, 2024 and sell it today you would earn a total of 26.00 from holding Holbrook Income or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.0% |
| Values | Daily Returns |
Templeton China World vs. Holbrook Income
Performance |
| Timeline |
| Templeton China World |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Holbrook Income |
Templeton China and Holbrook Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton China and Holbrook Income
The main advantage of trading using opposite Templeton China and Holbrook Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton China position performs unexpectedly, Holbrook Income 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 Holbrook Income will offset losses from the drop in Holbrook Income's long position.| Templeton China vs. California Bond Fund | Templeton China vs. Rationalpier 88 Convertible | Templeton China vs. Multisector Bond Sma | Templeton China vs. Gmo High Yield |
| Holbrook Income vs. Leggmason Partners Institutional | Holbrook Income vs. Iaadx | Holbrook Income vs. Bbh Intermediate Municipal | Holbrook Income vs. Arrow Managed Futures |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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