Correlation Between Templeton Foreign and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Templeton Global 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 Foreign and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Foreign Fund and Templeton Global Bond, you can compare the effects of market volatilities on Templeton Foreign and Templeton Global 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 Foreign with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Templeton Global.
Diversification Opportunities for Templeton Foreign and Templeton Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Templeton is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Templeton Foreign 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 Foreign Fund are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Templeton Global go up and down completely randomly.
Pair Corralation between Templeton Foreign and Templeton Global
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Templeton Global. In addition to that, Templeton Foreign is 1.55 times more volatile than Templeton Global Bond. It trades about -0.17 of its total potential returns per unit of risk. Templeton Global Bond is currently generating about -0.1 per unit of volatility. If you would invest 697.00 in Templeton Global Bond on August 29, 2024 and sell it today you would lose (10.00) from holding Templeton Global Bond or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Templeton Global Bond
Performance |
| Timeline |
| Templeton Foreign |
| Templeton Global Bond |
Templeton Foreign and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Templeton Global
The main advantage of trading using opposite Templeton Foreign and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.| Templeton Foreign vs. Dodge Cox Stock | Templeton Foreign vs. M Large Cap | Templeton Foreign vs. Fundamental Large Cap | Templeton Foreign vs. Transamerica Large Cap |
| Templeton Global vs. Capital World Bond | Templeton Global vs. Capital World Bond | Templeton Global vs. HUMANA INC | Templeton Global vs. Aquagold International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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