Correlation Between Templeton World and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Templeton World and Clearbridge Mid 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 World and Clearbridge Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Clearbridge Mid Cap, you can compare the effects of market volatilities on Templeton World and Clearbridge Mid 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 World with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Clearbridge Mid.
Diversification Opportunities for Templeton World and Clearbridge Mid
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Clearbridge is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap and Templeton World 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 World Fund are associated (or correlated) with Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Templeton World i.e., Templeton World and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Templeton World and Clearbridge Mid
Assuming the 90 days horizon Templeton World Fund is expected to generate 0.74 times more return on investment than Clearbridge Mid. However, Templeton World Fund is 1.36 times less risky than Clearbridge Mid. It trades about -0.15 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about -0.27 per unit of risk. If you would invest 1,637 in Templeton World Fund on December 1, 2024 and sell it today you would lose (35.00) from holding Templeton World Fund or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Clearbridge Mid Cap
Performance |
| Timeline |
| Templeton World |
| Clearbridge Mid Cap |
Templeton World and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Clearbridge Mid
The main advantage of trading using opposite Templeton World and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Clearbridge Mid 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 Clearbridge Mid will offset losses from the drop in Clearbridge Mid's long position.| Templeton World vs. Fidelity Vertible Securities | Templeton World vs. Columbia Convertible Securities | Templeton World vs. Invesco Vertible Securities | Templeton World vs. Calamos Vertible Fund |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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