Correlation Between Principal Lifetime and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime 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 Principal Lifetime and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Lifetime 2060 and Templeton Emerging Markets, you can compare the effects of market volatilities on Principal Lifetime 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 Principal Lifetime with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Templeton Emerging.
Diversification Opportunities for Principal Lifetime and Templeton Emerging
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Principal and Templeton is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime 2060 and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Principal Lifetime 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 Principal Lifetime 2060 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 Principal Lifetime i.e., Principal Lifetime and Templeton Emerging go up and down completely randomly.
Pair Corralation between Principal Lifetime and Templeton Emerging
Assuming the 90 days horizon Principal Lifetime 2060 is expected to generate 1.32 times more return on investment than Templeton Emerging. However, Principal Lifetime is 1.32 times more volatile than Templeton Emerging Markets. It trades about 0.12 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.07 per unit of risk. If you would invest 1,716 in Principal Lifetime 2060 on September 3, 2024 and sell it today you would earn a total of 78.00 from holding Principal Lifetime 2060 or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Principal Lifetime 2060 vs. Templeton Emerging Markets
Performance |
| Timeline |
| Principal Lifetime 2060 |
| Templeton Emerging |
Principal Lifetime and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Templeton Emerging
The main advantage of trading using opposite Principal Lifetime and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime 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.| Principal Lifetime vs. Templeton Emerging Markets | Principal Lifetime vs. Barings Emerging Markets | Principal Lifetime vs. Rbc Emerging Markets | Principal Lifetime vs. Artisan Emerging Markets |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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