Correlation Between Templeton Global and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Clearbridge Mid 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 Global and Clearbridge Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Bond and Clearbridge Mid Cap, you can compare the effects of market volatilities on Templeton Global and Clearbridge Mid 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 Global with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Clearbridge Mid.
Diversification Opportunities for Templeton Global and Clearbridge Mid
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Clearbridge is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap and Templeton Global 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 Global Bond are associated (or correlated) with Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Templeton Global i.e., Templeton Global and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Templeton Global and Clearbridge Mid
Assuming the 90 days horizon Templeton Global Bond is expected to generate 0.48 times more return on investment than Clearbridge Mid. However, Templeton Global Bond is 2.08 times less risky than Clearbridge Mid. It trades about 0.11 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about -0.27 per unit of risk. If you would invest 668.00 in Templeton Global Bond on December 1, 2024 and sell it today you would earn a total of 7.00 from holding Templeton Global Bond or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Clearbridge Mid Cap
Performance |
| Timeline |
| Templeton Global Bond |
| Clearbridge Mid Cap |
Templeton Global and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Clearbridge Mid
The main advantage of trading using opposite Templeton Global and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Clearbridge Mid 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 Clearbridge Mid will offset losses from the drop in Clearbridge Mid's long position.The idea behind Templeton Global Bond and Clearbridge Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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