Correlation Between Templeton Foreign and Western Asset
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Templeton Foreign and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and Western Asset.
Diversification Opportunities for Templeton Foreign and Western Asset
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and WESTERN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and Western Asset go up and down completely randomly.
Pair Corralation between Templeton Foreign and Western Asset
Assuming the 90 days horizon Templeton Foreign Fund is expected to under-perform the Western Asset. In addition to that, Templeton Foreign is 3.35 times more volatile than Western Asset Inflation. It trades about -0.04 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about 0.07 per unit of volatility. If you would invest 907.00 in Western Asset Inflation on August 28, 2024 and sell it today you would earn a total of 24.00 from holding Western Asset Inflation or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. Western Asset Inflation
Performance |
| Timeline |
| Templeton Foreign |
| Western Asset Inflation |
Templeton Foreign and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and Western Asset
The main advantage of trading using opposite Templeton Foreign and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Templeton Foreign vs. Franklin Mutual Beacon | Templeton Foreign vs. Templeton Developing Markets | Templeton Foreign vs. Franklin Mutual Global | Templeton Foreign vs. Franklin Mutual Global |
| Western Asset vs. Invesco Technology Fund | Western Asset vs. Mfs Technology Fund | Western Asset vs. Hennessy Technology Fund | Western Asset vs. Columbia Global Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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