Correlation Between Templeton Developing and Baron Small
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Baron Small 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 Baron Small 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 Baron Small Cap, you can compare the effects of market volatilities on Templeton Developing and Baron Small 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 Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Baron Small.
Diversification Opportunities for Templeton Developing and Baron Small
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Templeton and Baron is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap 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 Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Templeton Developing i.e., Templeton Developing and Baron Small go up and down completely randomly.
Pair Corralation between Templeton Developing and Baron Small
Assuming the 90 days horizon Templeton Developing is expected to generate 3.23 times less return on investment than Baron Small. But when comparing it to its historical volatility, Templeton Developing Markets is 1.07 times less risky than Baron Small. It trades about 0.03 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,494 in Baron Small Cap on September 3, 2024 and sell it today you would earn a total of 516.00 from holding Baron Small Cap or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Baron Small Cap
Performance |
| Timeline |
| Templeton Developing |
| Baron Small Cap |
Templeton Developing and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Baron Small
The main advantage of trading using opposite Templeton Developing and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Baron Small 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 Baron Small will offset losses from the drop in Baron Small'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 |
| Baron Small vs. Calamos Market Neutral | Baron Small vs. Kinetics Market Opportunities | Baron Small vs. Templeton Developing Markets | Baron Small vs. Mondrian Emerging Markets |
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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