Correlation Between Pace Large and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Pace Large 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 Pace Large and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Growth and Templeton Growth Fund, you can compare the effects of market volatilities on Pace Large 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 Pace Large with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Templeton Growth.
Diversification Opportunities for Pace Large and Templeton Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Templeton is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Pace Large 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 Large 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 Pace Large i.e., Pace Large and Templeton Growth go up and down completely randomly.
Pair Corralation between Pace Large and Templeton Growth
Assuming the 90 days horizon Pace Large is expected to generate 4.33 times less return on investment than Templeton Growth. In addition to that, Pace Large is 1.54 times more volatile than Templeton Growth Fund. It trades about 0.03 of its total potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.2 per unit of volatility. If you would invest 2,606 in Templeton Growth Fund on October 23, 2024 and sell it today you would earn a total of 69.00 from holding Templeton Growth Fund or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Large Growth vs. Templeton Growth Fund
Performance |
| Timeline |
| Pace Large Growth |
| Templeton Growth |
Pace Large and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Large and Templeton Growth
The main advantage of trading using opposite Pace Large and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large 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.| Pace Large vs. Glg Intl Small | Pace Large vs. Needham Aggressive Growth | Pace Large vs. Qs Defensive Growth | Pace Large vs. T Rowe Price |
| Templeton Growth vs. Schwab Government Money | Templeton Growth vs. Voya Government Money | Templeton Growth vs. Transamerica Funds | Templeton Growth vs. Aig Government Money |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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