Correlation Between Templeton Global and Six Circles
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Six Circles 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 Six Circles 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 Six Circles Global, you can compare the effects of market volatilities on Templeton Global and Six Circles 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 Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Six Circles.
Diversification Opportunities for Templeton Global and Six Circles
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Six is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Six Circles Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Global 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 Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Global has no effect on the direction of Templeton Global i.e., Templeton Global and Six Circles go up and down completely randomly.
Pair Corralation between Templeton Global and Six Circles
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Six Circles. In addition to that, Templeton Global is 1.8 times more volatile than Six Circles Global. It trades about -0.01 of its total potential returns per unit of risk. Six Circles Global is currently generating about 0.07 per unit of volatility. If you would invest 777.00 in Six Circles Global on September 2, 2024 and sell it today you would earn a total of 84.00 from holding Six Circles Global or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Six Circles Global
Performance |
| Timeline |
| Templeton Global Bond |
| Six Circles Global |
Templeton Global and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Six Circles
The main advantage of trading using opposite Templeton Global and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| Templeton Global vs. Franklin Mutual Beacon | Templeton Global vs. Templeton Developing Markets | Templeton Global vs. Franklin Mutual Global | Templeton Global vs. Franklin Mutual Global |
| Six Circles vs. Six Circles Ultra | Six Circles vs. Six Circles Tax | Six Circles vs. Six Circles Unconstrained | Six Circles vs. Six Circles International |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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