Correlation Between Clearbridge International and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Clearbridge International 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 Clearbridge International and Templeton Growth 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 Growth Fund, you can compare the effects of market volatilities on Clearbridge International 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 Clearbridge International with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge International and Templeton Growth.
Diversification Opportunities for Clearbridge International and Templeton Growth
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clearbridge and Templeton is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge International Grow and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth 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 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 Clearbridge International i.e., Clearbridge International and Templeton Growth go up and down completely randomly.
Pair Corralation between Clearbridge International and Templeton Growth
Assuming the 90 days horizon Clearbridge International Growth is expected to generate 1.09 times more return on investment than Templeton Growth. However, Clearbridge International is 1.09 times more volatile than Templeton Growth Fund. It trades about 0.06 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 5,623 in Clearbridge International Growth on November 1, 2024 and sell it today you would earn a total of 631.00 from holding Clearbridge International Growth or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Clearbridge International Grow vs. Templeton Growth Fund
Performance |
| Timeline |
| Clearbridge International |
| Templeton Growth |
Clearbridge International and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge International and Templeton Growth
The main advantage of trading using opposite Clearbridge International and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge International 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.The idea behind Clearbridge International Growth and Templeton Growth 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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