Correlation Between Templeton Global and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Metropolitan West 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 Global and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Bond and Metropolitan West Total, you can compare the effects of market volatilities on Templeton Global and Metropolitan West 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 Global with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Metropolitan West.
Diversification Opportunities for Templeton Global and Metropolitan West
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and Metropolitan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total and Templeton Global 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 Global Bond are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Templeton Global i.e., Templeton Global and Metropolitan West go up and down completely randomly.
Pair Corralation between Templeton Global and Metropolitan West
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Metropolitan West. In addition to that, Templeton Global is 1.45 times more volatile than Metropolitan West Total. It trades about -0.03 of its total potential returns per unit of risk. Metropolitan West Total is currently generating about 0.05 per unit of volatility. If you would invest 878.00 in Metropolitan West Total on September 1, 2024 and sell it today you would earn a total of 32.00 from holding Metropolitan West Total or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Metropolitan West Total
Performance |
| Timeline |
| Templeton Global Bond |
| Metropolitan West Total |
Templeton Global and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Metropolitan West
The main advantage of trading using opposite Templeton Global and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Templeton Global vs. Franklin Mutual Beacon | Templeton Global vs. Templeton Developing Markets | Templeton Global vs. Franklin Mutual Global | Templeton Global vs. Franklin Mutual Global |
| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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