Correlation Between Templeton Growth and Western Asset
Can any of the company-specific risk be diversified away by investing in both Templeton Growth 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 Growth 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 Growth Fund and Western Asset E, you can compare the effects of market volatilities on Templeton Growth 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 Growth with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Western Asset.
Diversification Opportunities for Templeton Growth and Western Asset
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and Western is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 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 E has no effect on the direction of Templeton Growth i.e., Templeton Growth and Western Asset go up and down completely randomly.
Pair Corralation between Templeton Growth and Western Asset
Assuming the 90 days horizon Templeton Growth Fund is expected to under-perform the Western Asset. In addition to that, Templeton Growth is 2.08 times more volatile than Western Asset E. It trades about -0.07 of its total potential returns per unit of risk. Western Asset E is currently generating about -0.05 per unit of volatility. If you would invest 918.00 in Western Asset E on October 20, 2024 and sell it today you would lose (11.00) from holding Western Asset E or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Growth Fund vs. Western Asset E
Performance |
| Timeline |
| Templeton Growth |
| Western Asset E |
Templeton Growth and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Western Asset
The main advantage of trading using opposite Templeton Growth and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth 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 Growth vs. Icon Information Technology | Templeton Growth vs. Invesco Technology Fund | Templeton Growth vs. Technology Ultrasector Profund | Templeton Growth vs. Pgim Jennison Technology |
| Western Asset vs. Profunds Large Cap Growth | Western Asset vs. Tax Managed Large Cap | Western Asset vs. Ab Large Cap | Western Asset vs. Transamerica Large 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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