Correlation Between Templeton Developing and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and Transamerica 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 Transamerica 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 Transamerica Emerging Markets, you can compare the effects of market volatilities on Templeton Developing and Transamerica 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and Transamerica Emerging.
Diversification Opportunities for Templeton Developing and Transamerica Emerging
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and Transamerica is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Templeton Developing i.e., Templeton Developing and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Templeton Developing and Transamerica Emerging
Assuming the 90 days horizon Templeton Developing Markets is expected to generate 1.14 times more return on investment than Transamerica Emerging. However, Templeton Developing is 1.14 times more volatile than Transamerica Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 1,630 in Templeton Developing Markets on September 4, 2024 and sell it today you would earn a total of 328.00 from holding Templeton Developing Markets or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Templeton Developing Markets vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Templeton Developing |
| Transamerica Emerging |
Templeton Developing and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and Transamerica Emerging
The main advantage of trading using opposite Templeton Developing and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, Transamerica 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 Transamerica Emerging will offset losses from the drop in Transamerica 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 Real Estate |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |