Correlation Between Templeton Developing and International Equity
Can any of the company-specific risk be diversified away by investing in both Templeton Developing and International Equity 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 International Equity 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 International Equity Series, you can compare the effects of market volatilities on Templeton Developing and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Developing and International Equity.
Diversification Opportunities for Templeton Developing and International Equity
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and International is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Developing Markets and International Equity Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Templeton Developing i.e., Templeton Developing and International Equity go up and down completely randomly.
Pair Corralation between Templeton Developing and International Equity
Assuming the 90 days horizon Templeton Developing Markets is expected to generate 1.31 times more return on investment than International Equity. However, Templeton Developing is 1.31 times more volatile than International Equity Series. It trades about -0.11 of its potential returns per unit of risk. International Equity Series is currently generating about -0.16 per unit of risk. If you would invest 2,047 in Templeton Developing Markets on August 29, 2024 and sell it today you would lose (91.00) from holding Templeton Developing Markets or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Developing Markets vs. International Equity Series
Performance |
| Timeline |
| Templeton Developing |
| International Equity |
Templeton Developing and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Developing and International Equity
The main advantage of trading using opposite Templeton Developing and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Developing position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity'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 |
| International Equity vs. Franklin Small Mid Cap | International Equity vs. Blackrock Glbl Sm | International Equity vs. Blackrock Fundamental Growth | International Equity vs. Blackrock Gbl Alloc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |