Correlation Between Templeton Emerging and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Templeton Emerging and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Nasdaq 100.
Diversification Opportunities for Templeton Emerging and Nasdaq 100
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Nasdaq is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Templeton Emerging and Nasdaq 100
Assuming the 90 days horizon Templeton Emerging is expected to generate 13.66 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Templeton Emerging Markets is 3.63 times less risky than Nasdaq 100. It trades about 0.02 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 33,051 in Nasdaq 100 2x Strategy on September 3, 2024 and sell it today you would earn a total of 8,683 from holding Nasdaq 100 2x Strategy or generate 26.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Templeton Emerging |
| Nasdaq 100 2x |
Templeton Emerging and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Nasdaq 100
The main advantage of trading using opposite Templeton Emerging and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100'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 |
| Nasdaq 100 vs. The Hartford Emerging | Nasdaq 100 vs. Kinetics Market Opportunities | Nasdaq 100 vs. Morgan Stanley Emerging | Nasdaq 100 vs. Locorr Market Trend |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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