Correlation Between Templeton Constrained and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both Templeton Constrained and Cambiar Smid 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 Constrained and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Strained Bond and Cambiar Smid Fund, you can compare the effects of market volatilities on Templeton Constrained and Cambiar Smid 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 Constrained with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Constrained and Cambiar Smid.
Diversification Opportunities for Templeton Constrained and Cambiar Smid
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Cambiar is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Strained Bond and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Templeton Constrained 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 Strained Bond are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Templeton Constrained i.e., Templeton Constrained and Cambiar Smid go up and down completely randomly.
Pair Corralation between Templeton Constrained and Cambiar Smid
Assuming the 90 days horizon Templeton Constrained is expected to generate 1.06 times less return on investment than Cambiar Smid. But when comparing it to its historical volatility, Templeton Strained Bond is 7.98 times less risky than Cambiar Smid. It trades about 0.39 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Cambiar Smid Fund on August 30, 2024 and sell it today you would earn a total of 464.00 from holding Cambiar Smid Fund or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.15% |
| Values | Daily Returns |
Templeton Strained Bond vs. Cambiar Smid Fund
Performance |
| Timeline |
| Templeton Strained Bond |
| Cambiar Smid |
Templeton Constrained and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Constrained and Cambiar Smid
The main advantage of trading using opposite Templeton Constrained and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Constrained position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.The idea behind Templeton Strained Bond and Cambiar Smid Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Cambiar Smid vs. T Rowe Price | Cambiar Smid vs. Astor Longshort Fund | Cambiar Smid vs. Ambrus Core Bond | Cambiar Smid vs. Bbh Intermediate Municipal |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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