Correlation Between Templeton Dragon and First Trust
Can any of the company-specific risk be diversified away by investing in both Templeton Dragon and First Trust 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 Templeton Dragon and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Dragon Closed and First Trust Intermediate, you can compare the effects of market volatilities on Templeton Dragon and First Trust 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 Templeton Dragon with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Dragon and First Trust.
Diversification Opportunities for Templeton Dragon and First Trust
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and First is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Dragon Closed and First Trust Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intermediate and Templeton Dragon 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 Templeton Dragon Closed are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Intermediate has no effect on the direction of Templeton Dragon i.e., Templeton Dragon and First Trust go up and down completely randomly.
Pair Corralation between Templeton Dragon and First Trust
Considering the 90-day investment horizon Templeton Dragon Closed is expected to under-perform the First Trust. In addition to that, Templeton Dragon is 1.45 times more volatile than First Trust Intermediate. It trades about -0.16 of its total potential returns per unit of risk. First Trust Intermediate is currently generating about -0.18 per unit of volatility. If you would invest 1,805 in First Trust Intermediate on January 12, 2025 and sell it today you would lose (137.00) from holding First Trust Intermediate or give up 7.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Dragon Closed vs. First Trust Intermediate
Performance |
| Timeline |
| Templeton Dragon Closed |
| First Trust Intermediate |
Templeton Dragon and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Dragon and First Trust
The main advantage of trading using opposite Templeton Dragon and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Dragon position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Templeton Dragon vs. Nuveen Municipalome | Templeton Dragon vs. Western Asset Investment | Templeton Dragon vs. Templeton Emerging Markets | Templeton Dragon vs. Tekla Life Sciences |
| First Trust vs. RiverNorth Flexible Municipalome | First Trust vs. DWS Municipal Income | First Trust vs. Blackrock Munivest | First Trust vs. MFS Municipal Income |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |