Correlation Between Templeton Developing and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Templeton Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Templeton Developing and Templeton Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Templeton Emerging.
Diversification Opportunities for Templeton Developing and Templeton Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and Templeton is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Templeton Developing i.e., Templeton Developing and Templeton Emerging go up and down completely randomly.
Pair Corralation between Templeton Developing and Templeton Emerging
Assuming the 90 days horizon Templeton Developing Markets is expected to generate 1.55 times more return on investment than Templeton Emerging. However, Templeton Developing is 1.55 times more volatile than Templeton Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,693 in Templeton Developing Markets on October 20, 2024 and sell it today you would earn a total of 212.00 from holding Templeton Developing Markets or generate 12.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. Templeton Emerging Markets
Performance |
| Timeline |
| Templeton Developing |
| Templeton Emerging |
Templeton Developing and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Templeton Emerging
The main advantage of trading using opposite Templeton Developing and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging'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 Emerging vs. Franklin Mutual Beacon | Templeton Emerging vs. Templeton Developing Markets | Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Franklin Mutual Global |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |