Correlation Between American Funds and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2020 and Templeton Emerging Markets, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Templeton Emerging.
Diversification Opportunities for American Funds and Templeton Emerging
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Templeton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2020 and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and American Funds 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 American Funds 2020 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 American Funds i.e., American Funds and Templeton Emerging go up and down completely randomly.
Pair Corralation between American Funds and Templeton Emerging
Assuming the 90 days horizon American Funds 2020 is expected to generate 0.62 times more return on investment than Templeton Emerging. However, American Funds 2020 is 1.61 times less risky than Templeton Emerging. It trades about 0.27 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 1,396 in American Funds 2020 on September 3, 2024 and sell it today you would earn a total of 25.00 from holding American Funds 2020 or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2020 vs. Templeton Emerging Markets
Performance |
| Timeline |
| American Funds 2020 |
| Templeton Emerging |
American Funds and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Templeton Emerging
The main advantage of trading using opposite American Funds and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Templeton Emerging Markets | American Funds vs. Legg Mason Partners | American Funds vs. Rbc Emerging Markets | American Funds 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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