Correlation Between Templeton Global and First Eagle
Can any of the company-specific risk be diversified away by investing in both Templeton Global 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 Global 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 Global Bond and First Eagle Overseas, you can compare the effects of market volatilities on Templeton Global 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 Global with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and First Eagle.
Diversification Opportunities for Templeton Global and First Eagle
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TEMPLETON and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and First Eagle Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Overseas 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 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 Overseas has no effect on the direction of Templeton Global i.e., Templeton Global and First Eagle go up and down completely randomly.
Pair Corralation between Templeton Global and First Eagle
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the First Eagle. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Global Bond is 1.04 times less risky than First Eagle. The mutual fund trades about -0.34 of its potential returns per unit of risk. The First Eagle Overseas is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,839 in First Eagle Overseas on August 25, 2024 and sell it today you would lose (96.00) from holding First Eagle Overseas or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. First Eagle Overseas
Performance |
| Timeline |
| Templeton Global Bond |
| First Eagle Overseas |
Templeton Global and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and First Eagle
The main advantage of trading using opposite Templeton Global and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global 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 Global vs. Franklin Mutual Beacon | Templeton Global vs. Templeton Developing Markets | Templeton Global vs. Franklin Mutual Global | Templeton Global vs. Franklin Mutual Global |
| First Eagle vs. First Eagle Global | First Eagle vs. Oppenheimer Developing Markets | First Eagle vs. Delaware Value Fund | First Eagle vs. Small Cap Value |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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