Correlation Between Templeton Global and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Templeton Global and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Templeton Foreign.
Diversification Opportunities for Templeton Global and Templeton Foreign
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Templeton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Templeton Global i.e., Templeton Global and Templeton Foreign go up and down completely randomly.
Pair Corralation between Templeton Global and Templeton Foreign
Assuming the 90 days horizon Templeton Global Bond is expected to generate 0.63 times more return on investment than Templeton Foreign. However, Templeton Global Bond is 1.59 times less risky than Templeton Foreign. It trades about -0.1 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.13 per unit of risk. 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 | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Templeton Foreign Fund
Performance |
| Timeline |
| Templeton Global Bond |
| Templeton Foreign |
Templeton Global and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Templeton Foreign
The main advantage of trading using opposite Templeton Global and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Templeton Foreign 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 Foreign will offset losses from the drop in Templeton Foreign's long position.| Templeton Global vs. Capital World Bond | Templeton Global vs. Capital World Bond | Templeton Global vs. HUMANA INC | Templeton Global vs. Aquagold International |
| Templeton Foreign vs. Victory High Income | Templeton Foreign vs. Ppm High Yield | Templeton Foreign vs. Morningstar Aggressive Growth | Templeton Foreign vs. Artisan High Income |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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