Correlation Between Templeton Emerging and Federated Global
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Federated Global 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 Emerging and Federated Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Emerging Markets and Federated Global Allocation, you can compare the effects of market volatilities on Templeton Emerging and Federated Global 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 Emerging with a short position of Federated Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Federated Global.
Diversification Opportunities for Templeton Emerging and Federated Global
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Templeton and Federated is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All and Templeton Emerging 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 Emerging Markets are associated (or correlated) with Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Federated Global go up and down completely randomly.
Pair Corralation between Templeton Emerging and Federated Global
Assuming the 90 days horizon Templeton Emerging is expected to generate 1.44 times less return on investment than Federated Global. In addition to that, Templeton Emerging is 1.38 times more volatile than Federated Global Allocation. It trades about 0.04 of its total potential returns per unit of risk. Federated Global Allocation is currently generating about 0.08 per unit of volatility. If you would invest 1,702 in Federated Global Allocation on September 4, 2024 and sell it today you would earn a total of 391.00 from holding Federated Global Allocation or generate 22.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Federated Global Allocation
Performance |
| Timeline |
| Templeton Emerging |
| Federated Global All |
Templeton Emerging and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Federated Global
The main advantage of trading using opposite Templeton Emerging and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Federated Global 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 Federated Global will offset losses from the drop in Federated Global's long position.| Templeton Emerging vs. Templeton Developing Markets | Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Templeton Foreign Fund | Templeton Emerging vs. Templeton Foreign Fund |
| Federated Global vs. Northern Small Cap | Federated Global vs. The Gabelli Small | Federated Global vs. Tax Managed Mid Small | Federated Global vs. Blackrock Sm 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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