Correlation Between Templeton Global and International Government
Can any of the company-specific risk be diversified away by investing in both Templeton Global and International Government 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 International Government 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 International Government Bond, you can compare the effects of market volatilities on Templeton Global and International Government 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 International Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and International Government.
Diversification Opportunities for Templeton Global and International Government
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and International is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and International Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Government 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 International Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Government has no effect on the direction of Templeton Global i.e., Templeton Global and International Government go up and down completely randomly.
Pair Corralation between Templeton Global and International Government
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the International Government. In addition to that, Templeton Global is 1.76 times more volatile than International Government Bond. It trades about -0.06 of its total potential returns per unit of risk. International Government Bond is currently generating about 0.0 per unit of volatility. If you would invest 1,012 in International Government Bond on August 31, 2024 and sell it today you would earn a total of 0.00 from holding International Government Bond or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. International Government Bond
Performance |
| Timeline |
| Templeton Global Bond |
| International Government |
Templeton Global and International Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and International Government
The main advantage of trading using opposite Templeton Global and International Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, International Government 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 International Government will offset losses from the drop in International Government's long position.| Templeton Global vs. Templeton Developing Markets | Templeton Global vs. Templeton Foreign Fund | Templeton Global vs. Templeton Foreign Fund | Templeton Global vs. Templeton Growth Fund |
| International Government vs. Goldman Sachs Clean | International Government vs. James Balanced Golden | International Government vs. Sprott Gold Equity | International Government vs. Franklin Gold Precious |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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