Correlation Between Payden Government and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Payden Government 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 Payden Government and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Templeton Growth Fund, you can compare the effects of market volatilities on Payden Government 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 Payden Government with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Templeton Growth.
Diversification Opportunities for Payden Government and Templeton Growth
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Payden and Templeton is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Payden Government 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 Payden Government Fund 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 Payden Government i.e., Payden Government and Templeton Growth go up and down completely randomly.
Pair Corralation between Payden Government and Templeton Growth
Assuming the 90 days horizon Payden Government is expected to generate 1.1 times less return on investment than Templeton Growth. But when comparing it to its historical volatility, Payden Government Fund is 3.85 times less risky than Templeton Growth. It trades about 0.23 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,797 in Templeton Growth Fund on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Templeton Growth Fund or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Templeton Growth Fund
Performance |
| Timeline |
| Payden Government |
| Templeton Growth |
Payden Government and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Templeton Growth
The main advantage of trading using opposite Payden Government and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government 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.| Payden Government vs. Payden Porate Bond | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Emerging Markets |
| Templeton Growth vs. Schwab Government Money | Templeton Growth vs. Aig Government Money | Templeton Growth vs. Franklin Adjustable Government | Templeton Growth vs. Virtus Seix Government |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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