Correlation Between Hood River and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Hood River and Templeton Emerging 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 Hood River and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hood River New and Templeton Emerging Markets, you can compare the effects of market volatilities on Hood River and Templeton Emerging 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 Hood River with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hood River and Templeton Emerging.
Diversification Opportunities for Hood River and Templeton Emerging
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hood and Templeton is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hood River New and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Hood River 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 Hood River New are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Hood River i.e., Hood River and Templeton Emerging go up and down completely randomly.
Pair Corralation between Hood River and Templeton Emerging
Assuming the 90 days horizon Hood River is expected to generate 1.15 times less return on investment than Templeton Emerging. In addition to that, Hood River is 3.39 times more volatile than Templeton Emerging Markets. It trades about 0.06 of its total potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.23 per unit of volatility. If you would invest 1,366 in Templeton Emerging Markets on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Templeton Emerging Markets or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hood River New vs. Templeton Emerging Markets
Performance |
| Timeline |
| Hood River New |
| Templeton Emerging |
Hood River and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hood River and Templeton Emerging
The main advantage of trading using opposite Hood River and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's long position.| Hood River vs. John Hancock Financial | Hood River vs. Financials Ultrasector Profund | Hood River vs. Davis Financial Fund | Hood River vs. Fidelity Advisor Financial |
| Templeton Emerging vs. Franklin Mutual Beacon | Templeton Emerging vs. Templeton Developing Markets | Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Franklin Mutual 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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