Correlation Between Templeton Growth and Clearbridge Sustainability
Can any of the company-specific risk be diversified away by investing in both Templeton Growth and Clearbridge Sustainability 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 Growth and Clearbridge Sustainability into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Growth Fund and Clearbridge Sustainability, you can compare the effects of market volatilities on Templeton Growth and Clearbridge Sustainability 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 Growth with a short position of Clearbridge Sustainability. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Clearbridge Sustainability.
Diversification Opportunities for Templeton Growth and Clearbridge Sustainability
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Clearbridge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Clearbridge Sustainability in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Sustainability and Templeton Growth 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 Growth Fund are associated (or correlated) with Clearbridge Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Sustainability has no effect on the direction of Templeton Growth i.e., Templeton Growth and Clearbridge Sustainability go up and down completely randomly.
Pair Corralation between Templeton Growth and Clearbridge Sustainability
Assuming the 90 days horizon Templeton Growth Fund is expected to generate 0.88 times more return on investment than Clearbridge Sustainability. However, Templeton Growth Fund is 1.13 times less risky than Clearbridge Sustainability. It trades about 0.01 of its potential returns per unit of risk. Clearbridge Sustainability is currently generating about -0.18 per unit of risk. If you would invest 2,688 in Templeton Growth Fund on December 1, 2024 and sell it today you would earn a total of 2.00 from holding Templeton Growth Fund or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Growth Fund vs. Clearbridge Sustainability
Performance |
| Timeline |
| Templeton Growth |
| Clearbridge Sustainability |
Templeton Growth and Clearbridge Sustainability Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Clearbridge Sustainability
The main advantage of trading using opposite Templeton Growth and Clearbridge Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth position performs unexpectedly, Clearbridge Sustainability 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 Sustainability will offset losses from the drop in Clearbridge Sustainability's long position.| Templeton Growth vs. Champlain Small | Templeton Growth vs. Ab Small Cap | Templeton Growth vs. Artisan Small Cap | Templeton Growth vs. Franklin Small Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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