Correlation Between Templeton Developing and Us Government
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Us Government 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 Developing and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Developing Markets and Us Government Securities, you can compare the effects of market volatilities on Templeton Developing and Us Government 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 Developing with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Us Government.
Diversification Opportunities for Templeton Developing and Us Government
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Templeton and AMUSX is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Templeton Developing 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 Developing Markets are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Templeton Developing i.e., Templeton Developing and Us Government go up and down completely randomly.
Pair Corralation between Templeton Developing and Us Government
Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Us Government. In addition to that, Templeton Developing is 3.02 times more volatile than Us Government Securities. It trades about -0.15 of its total potential returns per unit of risk. Us Government Securities is currently generating about 0.07 per unit of volatility. If you would invest 1,189 in Us Government Securities on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Us Government Securities or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Us Government Securities
Performance |
| Timeline |
| Templeton Developing |
| Us Government Securities |
Templeton Developing and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Us Government
The main advantage of trading using opposite Templeton Developing and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Templeton Growth Fund | Templeton Developing vs. Franklin Real Estate | Templeton Developing vs. HUMANA INC |
| Us Government vs. Artisan Emerging Markets | Us Government vs. Templeton Developing Markets | Us Government vs. Massmutual Select Diversified | Us Government vs. Morgan Stanley Emerging |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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