Correlation Between Templeton Global and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Mid Cap 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 Global and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Bond and Mid Cap Value, you can compare the effects of market volatilities on Templeton Global and Mid Cap 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 Global with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Mid Cap.
Diversification Opportunities for Templeton Global and Mid Cap
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Mid is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value and Templeton Global 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 Global Bond are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Templeton Global i.e., Templeton Global and Mid Cap go up and down completely randomly.
Pair Corralation between Templeton Global and Mid Cap
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Mid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Global Bond is 1.15 times less risky than Mid Cap. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Mid Cap Value is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,697 in Mid Cap Value on August 24, 2024 and sell it today you would earn a total of 39.00 from holding Mid Cap Value or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Mid Cap Value
Performance |
| Timeline |
| Templeton Global Bond |
| Mid Cap Value |
Templeton Global and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Mid Cap
The main advantage of trading using opposite Templeton Global and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Templeton Global vs. HUMANA INC | Templeton Global vs. Aquagold International | Templeton Global vs. Barloworld Ltd ADR | Templeton Global vs. Morningstar Unconstrained Allocation |
| Mid Cap vs. Value Fund R | Mid Cap vs. Prudential Jennison Mid Cap | Mid Cap vs. Eaton Vance Atlanta | Mid Cap vs. Templeton Global Bond |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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