Correlation Between Templeton Developing and Western Asset
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Western Asset 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 Western Asset 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 Western Asset Municipal, you can compare the effects of market volatilities on Templeton Developing and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Western Asset.
Diversification Opportunities for Templeton Developing and Western Asset
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Templeton and Western is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Templeton Developing i.e., Templeton Developing and Western Asset go up and down completely randomly.
Pair Corralation between Templeton Developing and Western Asset
Assuming the 90 days horizon Templeton Developing Markets is expected to generate 3.34 times more return on investment than Western Asset. However, Templeton Developing is 3.34 times more volatile than Western Asset Municipal. It trades about 0.03 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.08 per unit of risk. If you would invest 1,919 in Templeton Developing Markets on October 25, 2024 and sell it today you would earn a total of 7.00 from holding Templeton Developing Markets or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Templeton Developing Markets vs. Western Asset Municipal
Performance |
| Timeline |
| Templeton Developing |
| Western Asset Municipal |
Templeton Developing and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Western Asset
The main advantage of trading using opposite Templeton Developing and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Templeton Developing vs. Templeton Foreign Fund | Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Templeton Growth Fund | Templeton Developing vs. Franklin Small Mid Cap |
| Western Asset vs. Moderate Balanced Allocation | Western Asset vs. Jp Morgan Smartretirement | Western Asset vs. Voya Target Retirement | Western Asset vs. Calvert Moderate Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |