Correlation Between Templeton China and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Templeton China and Kensington Active 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 Kensington Active 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 Kensington Active Advantage, you can compare the effects of market volatilities on Templeton China and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton China and Kensington Active.
Diversification Opportunities for Templeton China and Kensington Active
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Kensington is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Templeton China World and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Templeton China i.e., Templeton China and Kensington Active go up and down completely randomly.
Pair Corralation between Templeton China and Kensington Active
If you would invest 998.00 in Kensington Active Advantage on September 2, 2024 and sell it today you would earn a total of 32.00 from holding Kensington Active Advantage or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Templeton China World vs. Kensington Active Advantage
Performance |
| Timeline |
| Templeton China World |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Kensington Active |
Templeton China and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton China and Kensington Active
The main advantage of trading using opposite Templeton China and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton China position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Templeton China vs. Dreyfus Institutional Reserves | Templeton China vs. Cref Money Market | Templeton China vs. Lord Abbett Govt | Templeton China vs. Franklin Government Money |
| Kensington Active vs. Kensington Active Advantage | Kensington Active vs. Kensington Dynamic Growth | Kensington Active vs. Kensington Dynamic Growth | Kensington Active vs. Kensington Dynamic Growth |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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