Correlation Between Templeton Foreign and First Eagle
Can any of the company-specific risk be diversified away by investing in both Templeton Foreign and First Eagle 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 Foreign and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Foreign Fund and First Eagle Gold, you can compare the effects of market volatilities on Templeton Foreign and First Eagle 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 Foreign with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Foreign and First Eagle.
Diversification Opportunities for Templeton Foreign and First Eagle
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and FIRST is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Foreign Fund and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and Templeton Foreign 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 Foreign Fund are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Gold has no effect on the direction of Templeton Foreign i.e., Templeton Foreign and First Eagle go up and down completely randomly.
Pair Corralation between Templeton Foreign and First Eagle
Assuming the 90 days horizon Templeton Foreign Fund is expected to generate 0.55 times more return on investment than First Eagle. However, Templeton Foreign Fund is 1.81 times less risky than First Eagle. It trades about -0.11 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.16 per unit of risk. If you would invest 819.00 in Templeton Foreign Fund on September 4, 2024 and sell it today you would lose (20.00) from holding Templeton Foreign Fund or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Foreign Fund vs. First Eagle Gold
Performance |
| Timeline |
| Templeton Foreign |
| First Eagle Gold |
Templeton Foreign and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Foreign and First Eagle
The main advantage of trading using opposite Templeton Foreign and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Foreign position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| Templeton Foreign vs. Franklin Mutual Beacon | Templeton Foreign vs. Templeton Developing Markets | Templeton Foreign vs. Franklin Mutual Global | Templeton Foreign vs. Franklin Mutual Global |
| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Global | First Eagle vs. Oppenheimer Gold Special | First Eagle vs. Aquagold International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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