Correlation Between Dimensional Retirement and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Dimensional Retirement and Templeton Global 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 Dimensional Retirement and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Retirement Income and Templeton Global Bond, you can compare the effects of market volatilities on Dimensional Retirement and Templeton Global 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 Dimensional Retirement with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Retirement and Templeton Global.
Diversification Opportunities for Dimensional Retirement and Templeton Global
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dimensional and Templeton is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Dimensional Retirement 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 Dimensional Retirement Income are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Dimensional Retirement i.e., Dimensional Retirement and Templeton Global go up and down completely randomly.
Pair Corralation between Dimensional Retirement and Templeton Global
Assuming the 90 days horizon Dimensional Retirement Income is expected to generate 0.4 times more return on investment than Templeton Global. However, Dimensional Retirement Income is 2.5 times less risky than Templeton Global. It trades about 0.17 of its potential returns per unit of risk. Templeton Global Bond is currently generating about -0.01 per unit of risk. If you would invest 1,104 in Dimensional Retirement Income on September 3, 2024 and sell it today you would earn a total of 61.00 from holding Dimensional Retirement Income or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Retirement Income vs. Templeton Global Bond
Performance |
| Timeline |
| Dimensional Retirement |
| Templeton Global Bond |
Dimensional Retirement and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Retirement and Templeton Global
The main advantage of trading using opposite Dimensional Retirement and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Retirement position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.The idea behind Dimensional Retirement Income and Templeton Global Bond 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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