Correlation Between Pace Municipal and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Pace Municipal 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 Pace Municipal and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Templeton Global Smaller, you can compare the effects of market volatilities on Pace Municipal 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 Pace Municipal with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Templeton Global.
Diversification Opportunities for Pace Municipal and Templeton Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Templeton is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Templeton Global Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Smaller and Pace Municipal 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 Pace Municipal Fixed 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 Smaller has no effect on the direction of Pace Municipal i.e., Pace Municipal and Templeton Global go up and down completely randomly.
Pair Corralation between Pace Municipal and Templeton Global
Assuming the 90 days horizon Pace Municipal is expected to generate 1.81 times less return on investment than Templeton Global. But when comparing it to its historical volatility, Pace Municipal Fixed is 4.81 times less risky than Templeton Global. It trades about 0.07 of its potential returns per unit of risk. Templeton Global Smaller is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 835.00 in Templeton Global Smaller on November 8, 2024 and sell it today you would earn a total of 63.00 from holding Templeton Global Smaller or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Templeton Global Smaller
Performance |
| Timeline |
| Pace Municipal Fixed |
| Templeton Global Smaller |
Pace Municipal and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Templeton Global
The main advantage of trading using opposite Pace Municipal and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal 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.| Pace Municipal vs. Fidelity Advisor Gold | Pace Municipal vs. First Eagle Gold | Pace Municipal vs. World Precious Minerals | Pace Municipal vs. Precious Metals And |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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