Correlation Between Templeton Emerging and Templeton Asian
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Templeton Asian 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 Templeton Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Emerging Mkt and Templeton Asian Bond, you can compare the effects of market volatilities on Templeton Emerging and Templeton Asian 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 Templeton Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Templeton Asian.
Diversification Opportunities for Templeton Emerging and Templeton Asian
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Templeton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Mkt and Templeton Asian Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Asian Bond 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 Mkt are associated (or correlated) with Templeton Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Asian Bond has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Templeton Asian go up and down completely randomly.
Pair Corralation between Templeton Emerging and Templeton Asian
Assuming the 90 days trading horizon Templeton Emerging Mkt is expected to under-perform the Templeton Asian. In addition to that, Templeton Emerging is 1.59 times more volatile than Templeton Asian Bond. It trades about -0.01 of its total potential returns per unit of risk. Templeton Asian Bond is currently generating about 0.06 per unit of volatility. If you would invest 1,732 in Templeton Asian Bond on September 14, 2024 and sell it today you would earn a total of 65.00 from holding Templeton Asian Bond or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Templeton Emerging Mkt vs. Templeton Asian Bond
Performance |
| Timeline |
| Templeton Emerging Mkt |
| Templeton Asian Bond |
Templeton Emerging and Templeton Asian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Templeton Asian
The main advantage of trading using opposite Templeton Emerging and Templeton Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Templeton Asian 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 Templeton Asian will offset losses from the drop in Templeton Asian's long position.| Templeton Emerging vs. Groupama Entreprises N | Templeton Emerging vs. Renaissance Europe C | Templeton Emerging vs. Superior Plus Corp | Templeton Emerging vs. Origin Agritech |
| Templeton Asian vs. Groupama Entreprises N | Templeton Asian vs. Renaissance Europe C | Templeton Asian vs. Superior Plus Corp | Templeton Asian vs. Origin Agritech |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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