Correlation Between Templeton Constrained and James Alpha
Can any of the company-specific risk be diversified away by investing in both Templeton Constrained and James Alpha 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 James Alpha 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 James Alpha Structured, you can compare the effects of market volatilities on Templeton Constrained and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Constrained and James Alpha.
Diversification Opportunities for Templeton Constrained and James Alpha
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and James is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Strained Bond and James Alpha Structured in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Structured 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Structured has no effect on the direction of Templeton Constrained i.e., Templeton Constrained and James Alpha go up and down completely randomly.
Pair Corralation between Templeton Constrained and James Alpha
Assuming the 90 days horizon Templeton Strained Bond is expected to generate 0.64 times more return on investment than James Alpha. However, Templeton Strained Bond is 1.56 times less risky than James Alpha. It trades about 0.38 of its potential returns per unit of risk. James Alpha Structured is currently generating about 0.16 per unit of risk. If you would invest 866.00 in Templeton Strained Bond on November 28, 2024 and sell it today you would earn a total of 157.00 from holding Templeton Strained Bond or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.1% |
| Values | Daily Returns |
Templeton Strained Bond vs. James Alpha Structured
Performance |
| Timeline |
| Templeton Strained Bond |
| James Alpha Structured |
Templeton Constrained and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Constrained and James Alpha
The main advantage of trading using opposite Templeton Constrained and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Constrained position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| Templeton Constrained vs. Multisector Bond Sma | Templeton Constrained vs. Gmo High Yield | Templeton Constrained vs. Dreyfusstandish Global Fixed | Templeton Constrained vs. Artisan High Income |
| James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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