Correlation Between Templeton Global and Western Asset
Can any of the company-specific risk be diversified away by investing in both Templeton Global 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 Global 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 Global Bond and Western Asset Mortgage, you can compare the effects of market volatilities on Templeton Global 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 Global with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Western Asset.
Diversification Opportunities for Templeton Global and Western Asset
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and Western is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Western Asset Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Mortgage 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 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 Mortgage has no effect on the direction of Templeton Global i.e., Templeton Global and Western Asset go up and down completely randomly.
Pair Corralation between Templeton Global and Western Asset
Assuming the 90 days horizon Templeton Global is expected to generate 4.04 times less return on investment than Western Asset. In addition to that, Templeton Global is 1.75 times more volatile than Western Asset Mortgage. It trades about 0.02 of its total potential returns per unit of risk. Western Asset Mortgage is currently generating about 0.17 per unit of volatility. If you would invest 820.00 in Western Asset Mortgage on September 2, 2024 and sell it today you would earn a total of 11.00 from holding Western Asset Mortgage or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Western Asset Mortgage
Performance |
| Timeline |
| Templeton Global Bond |
| Western Asset Mortgage |
Templeton Global and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Western Asset
The main advantage of trading using opposite Templeton Global and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global 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 Global vs. Goldman Sachs Emerging | Templeton Global vs. Western Asset Diversified | Templeton Global vs. Locorr Market Trend | Templeton Global vs. Ep Emerging Markets |
| Western Asset vs. Federated Global Allocation | Western Asset vs. T Rowe Price | Western Asset vs. Commonwealth Global Fund | Western Asset 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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