Correlation Between Templeton Emerging and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime Hybrid, you can compare the effects of market volatilities on Templeton Emerging and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Principal Lifetime.
Diversification Opportunities for Templeton Emerging and Principal Lifetime
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and Principal is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Principal Lifetime go up and down completely randomly.
Pair Corralation between Templeton Emerging and Principal Lifetime
Assuming the 90 days horizon Templeton Emerging Markets is expected to generate 1.83 times more return on investment than Principal Lifetime. However, Templeton Emerging is 1.83 times more volatile than Principal Lifetime Hybrid. It trades about 0.04 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.07 per unit of risk. If you would invest 1,192 in Templeton Emerging Markets on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Templeton Emerging Markets or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| Templeton Emerging |
| Principal Lifetime Hybrid |
Templeton Emerging and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Principal Lifetime
The main advantage of trading using opposite Templeton Emerging and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| Templeton Emerging vs. Franklin Mutual Global | Templeton Emerging vs. Templeton Growth Fund | Templeton Emerging vs. Franklin Real Estate | Templeton Emerging vs. HUMANA INC |
| Principal Lifetime vs. Dodge Cox Emerging | Principal Lifetime vs. T Rowe Price | Principal Lifetime vs. Artisan Emerging Markets | Principal Lifetime vs. Templeton Emerging Markets |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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