Correlation Between Clearbridge International and Templeton Global

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Can any of the company-specific risk be diversified away by investing in both Clearbridge International and Templeton Global 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 Clearbridge International and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge International Growth and Templeton Global Balanced, you can compare the effects of market volatilities on Clearbridge International and Templeton Global 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 Clearbridge International with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Templeton Global.

Diversification Opportunities for Clearbridge International and Templeton Global

ClearbridgeTempletonDiversified AwayClearbridgeTempletonDiversified Away100%
0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Clearbridge and Templeton is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Grow and Templeton Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Balanced and Clearbridge International 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 Clearbridge International Growth are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Balanced has no effect on the direction of Clearbridge International i.e., Clearbridge International and Templeton Global go up and down completely randomly.

Pair Corralation between Clearbridge International and Templeton Global

Assuming the 90 days horizon Clearbridge International Growth is expected to generate 1.4 times more return on investment than Templeton Global. However, Clearbridge International is 1.4 times more volatile than Templeton Global Balanced. It trades about 0.12 of its potential returns per unit of risk. Templeton Global Balanced is currently generating about 0.09 per unit of risk. If you would invest  6,076  in Clearbridge International Growth on November 25, 2024 and sell it today you would earn a total of  347.00  from holding Clearbridge International Growth or generate 5.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Clearbridge International Grow  vs.  Templeton Global Balanced

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-2024
JavaScript chart by amCharts 3.21.15LGGAX TAGBX
       Timeline  
Clearbridge International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge International Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clearbridge International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb59606162636465
Templeton Global Balanced 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Global Balanced are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Templeton Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.42.452.5

Clearbridge International and Templeton Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.44-1.83-1.22-0.60.00.621.271.932.583.23 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15LGGAX TAGBX
       Returns  

Pair Trading with Clearbridge International and Templeton Global

The main advantage of trading using opposite Clearbridge International and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.
The idea behind Clearbridge International Growth and Templeton Global Balanced 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.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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