Correlation Between Mid Cap and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Templeton Growth 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 Mid Cap and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Templeton Growth Fund, you can compare the effects of market volatilities on Mid Cap and Templeton Growth 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 Mid Cap with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Templeton Growth.
Diversification Opportunities for Mid Cap and Templeton Growth
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mid and Templeton is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Mid Cap i.e., Mid Cap and Templeton Growth go up and down completely randomly.
Pair Corralation between Mid Cap and Templeton Growth
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.57 times more return on investment than Templeton Growth. However, Mid Cap is 1.57 times more volatile than Templeton Growth Fund. It trades about -0.15 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about -0.26 per unit of risk. If you would invest 4,016 in Mid Cap Growth on October 12, 2024 and sell it today you would lose (169.00) from holding Mid Cap Growth or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Templeton Growth Fund
Performance |
| Timeline |
| Mid Cap Growth |
| Templeton Growth |
Mid Cap and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Templeton Growth
The main advantage of trading using opposite Mid Cap and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Templeton Growth 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 Growth will offset losses from the drop in Templeton Growth's long position.| Mid Cap vs. Touchstone Sustainability And | Mid Cap vs. Growth Opportunities Fund | Mid Cap vs. Total Return Fund | Mid Cap vs. William Blair International |
| Templeton Growth vs. Federated Global Allocation | Templeton Growth vs. Kinetics Global Fund | Templeton Growth vs. Investec Global Franchise | Templeton Growth vs. Barings Global Floating |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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