Correlation Between Templeton Developing and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Templeton Growth 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 Templeton Growth 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 Templeton Growth Fund, you can compare the effects of market volatilities on Templeton Developing and Templeton Growth 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 Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Templeton Growth.
Diversification Opportunities for Templeton Developing and Templeton Growth
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and Templeton is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth 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 Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Templeton Developing i.e., Templeton Developing and Templeton Growth go up and down completely randomly.
Pair Corralation between Templeton Developing and Templeton Growth
Assuming the 90 days horizon Templeton Developing Markets is expected to under-perform the Templeton Growth. In addition to that, Templeton Developing is 1.36 times more volatile than Templeton Growth Fund. It trades about -0.17 of its total potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.02 per unit of volatility. If you would invest 2,737 in Templeton Growth Fund on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Templeton Growth Fund or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Templeton Growth Fund
Performance |
| Timeline |
| Templeton Developing |
| Templeton Growth |
Templeton Developing and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Templeton Growth
The main advantage of trading using opposite Templeton Developing and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Templeton Growth 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 Growth will offset losses from the drop in Templeton Growth'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 |
| Templeton Growth vs. Guinness Atkinson Alternative | Templeton Growth vs. Goldman Sachs Mlp | Templeton Growth vs. Alpsalerian Energy Infrastructure | Templeton Growth vs. Clearbridge Energy Mlp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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