Correlation Between Templeton Emerging and Brandywineglobal
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Brandywineglobal 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 Brandywineglobal 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 Brandywineglobal High, you can compare the effects of market volatilities on Templeton Emerging and Brandywineglobal 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 Brandywineglobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Brandywineglobal.
Diversification Opportunities for Templeton Emerging and Brandywineglobal
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Brandywineglobal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Brandywineglobal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywineglobal High 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 Brandywineglobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywineglobal High has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Brandywineglobal go up and down completely randomly.
Pair Corralation between Templeton Emerging and Brandywineglobal
Assuming the 90 days horizon Templeton Emerging Markets is expected to generate 5.9 times more return on investment than Brandywineglobal. However, Templeton Emerging is 5.9 times more volatile than Brandywineglobal High. It trades about -0.02 of its potential returns per unit of risk. Brandywineglobal High is currently generating about -0.25 per unit of risk. If you would invest 1,361 in Templeton Emerging Markets on December 13, 2024 and sell it today you would lose (7.00) from holding Templeton Emerging Markets or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Brandywineglobal High
Performance |
| Timeline |
| Templeton Emerging |
| Brandywineglobal High |
Templeton Emerging and Brandywineglobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Brandywineglobal
The main advantage of trading using opposite Templeton Emerging and Brandywineglobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Brandywineglobal 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 Brandywineglobal will offset losses from the drop in Brandywineglobal's long position.| Templeton Emerging vs. Blackrock Developed Real | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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