Correlation Between Templeton Emerging and Transamerica Capital
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Transamerica Capital 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 Transamerica Capital 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 Transamerica Capital Growth, you can compare the effects of market volatilities on Templeton Emerging and Transamerica Capital 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 Transamerica Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Transamerica Capital.
Diversification Opportunities for Templeton Emerging and Transamerica Capital
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Templeton and Transamerica is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Transamerica Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Capital 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 Transamerica Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Capital has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Transamerica Capital go up and down completely randomly.
Pair Corralation between Templeton Emerging and Transamerica Capital
Assuming the 90 days horizon Templeton Emerging is expected to generate 4.22 times less return on investment than Transamerica Capital. But when comparing it to its historical volatility, Templeton Emerging Markets is 2.67 times less risky than Transamerica Capital. It trades about 0.08 of its potential returns per unit of risk. Transamerica Capital Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,620 in Transamerica Capital Growth on September 4, 2024 and sell it today you would earn a total of 1,589 from holding Transamerica Capital Growth or generate 60.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Transamerica Capital Growth
Performance |
| Timeline |
| Templeton Emerging |
| Transamerica Capital |
Templeton Emerging and Transamerica Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Transamerica Capital
The main advantage of trading using opposite Templeton Emerging and Transamerica Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Transamerica Capital 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 Transamerica Capital will offset losses from the drop in Transamerica Capital'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 |
| Transamerica Capital vs. T Rowe Price | Transamerica Capital vs. Legg Mason Partners | Transamerica Capital vs. Templeton Emerging Markets | Transamerica Capital vs. T Rowe Price |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |