Correlation Between Clearbridge Appreciation and Templeton World
Can any of the company-specific risk be diversified away by investing in both Clearbridge Appreciation and Templeton World 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 Clearbridge Appreciation and Templeton World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearbridge Appreciation Fund and Templeton World Fund, you can compare the effects of market volatilities on Clearbridge Appreciation and Templeton World 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 Clearbridge Appreciation with a short position of Templeton World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearbridge Appreciation and Templeton World.
Diversification Opportunities for Clearbridge Appreciation and Templeton World
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clearbridge and Templeton is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Appreciation Fund and Templeton World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton World and Clearbridge Appreciation 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 Clearbridge Appreciation Fund are associated (or correlated) with Templeton World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton World has no effect on the direction of Clearbridge Appreciation i.e., Clearbridge Appreciation and Templeton World go up and down completely randomly.
Pair Corralation between Clearbridge Appreciation and Templeton World
Assuming the 90 days horizon Clearbridge Appreciation Fund is expected to generate 1.02 times more return on investment than Templeton World. However, Clearbridge Appreciation is 1.02 times more volatile than Templeton World Fund. It trades about 0.16 of its potential returns per unit of risk. Templeton World Fund is currently generating about 0.02 per unit of risk. If you would invest 3,694 in Clearbridge Appreciation Fund on August 27, 2024 and sell it today you would earn a total of 107.00 from holding Clearbridge Appreciation Fund or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearbridge Appreciation Fund vs. Templeton World Fund
Performance |
| Timeline |
| Clearbridge Appreciation |
| Templeton World |
Clearbridge Appreciation and Templeton World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearbridge Appreciation and Templeton World
The main advantage of trading using opposite Clearbridge Appreciation and Templeton World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Appreciation position performs unexpectedly, Templeton World 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 World will offset losses from the drop in Templeton World's long position.The idea behind Clearbridge Appreciation Fund and Templeton World Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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