Correlation Between Financials Ultrasector and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Templeton Growth 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 Financials Ultrasector and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Templeton Growth Fund, you can compare the effects of market volatilities on Financials Ultrasector and Templeton Growth 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 Financials Ultrasector with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Templeton Growth.
Diversification Opportunities for Financials Ultrasector and Templeton Growth
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Financials and Templeton is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Templeton Growth go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Templeton Growth
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 1.93 times more return on investment than Templeton Growth. However, Financials Ultrasector is 1.93 times more volatile than Templeton Growth Fund. It trades about 0.16 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 3,319 in Financials Ultrasector Profund on September 12, 2024 and sell it today you would earn a total of 1,094 from holding Financials Ultrasector Profund or generate 32.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Templeton Growth Fund
Performance |
| Timeline |
| Financials Ultrasector |
| Templeton Growth |
Financials Ultrasector and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Templeton Growth
The main advantage of trading using opposite Financials Ultrasector and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Templeton Growth 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 Templeton Growth will offset losses from the drop in Templeton Growth's long position.| Financials Ultrasector vs. Volumetric Fund Volumetric | Financials Ultrasector vs. L Abbett Fundamental | Financials Ultrasector vs. Qs Growth Fund | Financials Ultrasector vs. Ab Small Cap |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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