Correlation Between Dow 2x and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Templeton Foreign 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 Dow 2x and Templeton Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Templeton Foreign Fund, you can compare the effects of market volatilities on Dow 2x and Templeton Foreign 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 Dow 2x with a short position of Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Templeton Foreign.
Diversification Opportunities for Dow 2x and Templeton Foreign
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Templeton is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Dow 2x i.e., Dow 2x and Templeton Foreign go up and down completely randomly.
Pair Corralation between Dow 2x and Templeton Foreign
Assuming the 90 days horizon Dow 2x Strategy is expected to under-perform the Templeton Foreign. In addition to that, Dow 2x is 1.84 times more volatile than Templeton Foreign Fund. It trades about -0.3 of its total potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.36 per unit of volatility. If you would invest 819.00 in Templeton Foreign Fund on October 12, 2024 and sell it today you would lose (54.00) from holding Templeton Foreign Fund or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Templeton Foreign Fund
Performance |
| Timeline |
| Dow 2x Strategy |
| Templeton Foreign |
Dow 2x and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Templeton Foreign
The main advantage of trading using opposite Dow 2x and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Templeton Foreign 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 Foreign will offset losses from the drop in Templeton Foreign's long position.| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
| Templeton Foreign vs. Virtus Multi Strategy Target | Templeton Foreign vs. Ashmore Emerging Markets | Templeton Foreign vs. Artisan Developing World | Templeton Foreign vs. Dow 2x Strategy |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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