Correlation Between Mondrian Emerging and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Mondrian Emerging 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 Mondrian Emerging and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondrian Emerging Markets and Templeton Emerging Markets, you can compare the effects of market volatilities on Mondrian Emerging 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 Mondrian Emerging with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondrian Emerging and Templeton Emerging.
Diversification Opportunities for Mondrian Emerging and Templeton Emerging
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mondrian and Templeton is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mondrian Emerging Markets and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Mondrian Emerging 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 Mondrian Emerging Markets 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 Mondrian Emerging i.e., Mondrian Emerging and Templeton Emerging go up and down completely randomly.
Pair Corralation between Mondrian Emerging and Templeton Emerging
Assuming the 90 days horizon Mondrian Emerging Markets is expected to under-perform the Templeton Emerging. In addition to that, Mondrian Emerging is 1.92 times more volatile than Templeton Emerging Markets. It trades about -0.24 of its total potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.21 per unit of volatility. If you would invest 1,424 in Templeton Emerging Markets on September 3, 2024 and sell it today you would lose (58.00) from holding Templeton Emerging Markets or give up 4.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mondrian Emerging Markets vs. Templeton Emerging Markets
Performance |
| Timeline |
| Mondrian Emerging Markets |
| Templeton Emerging |
Mondrian Emerging and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondrian Emerging and Templeton Emerging
The main advantage of trading using opposite Mondrian Emerging and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondrian Emerging 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.| Mondrian Emerging vs. Franklin Mutual Global | Mondrian Emerging vs. Templeton Growth Fund | Mondrian Emerging vs. Franklin Real Estate | Mondrian Emerging vs. HUMANA INC |
| Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Templeton Growth Fund | Templeton Emerging vs. Franklin Real Estate | Templeton Emerging vs. HUMANA INC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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