Correlation Between Templeton Global and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Vanguard Global 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 Vanguard Global 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 Vanguard Global Wellington, you can compare the effects of market volatilities on Templeton Global and Vanguard Global 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 Vanguard Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Vanguard Global.
Diversification Opportunities for Templeton Global and Vanguard Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Templeton and Vanguard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Vanguard Global Wellington in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Well 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 Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Well has no effect on the direction of Templeton Global i.e., Templeton Global and Vanguard Global go up and down completely randomly.
Pair Corralation between Templeton Global and Vanguard Global
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Vanguard Global. In addition to that, Templeton Global is 1.74 times more volatile than Vanguard Global Wellington. It trades about -0.06 of its total potential returns per unit of risk. Vanguard Global Wellington is currently generating about 0.22 per unit of volatility. If you would invest 2,677 in Vanguard Global Wellington on September 4, 2024 and sell it today you would earn a total of 44.00 from holding Vanguard Global Wellington or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Templeton Global Bond vs. Vanguard Global Wellington
Performance |
| Timeline |
| Templeton Global Bond |
| Vanguard Global Well |
Templeton Global and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Vanguard Global
The main advantage of trading using opposite Templeton Global and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Vanguard Global 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 Vanguard Global will offset losses from the drop in Vanguard Global's long position.| Templeton Global vs. Franklin Mutual Beacon | Templeton Global vs. Franklin Mutual Global | Templeton Global vs. Franklin Mutual Global | Templeton Global vs. Templeton Foreign Fund |
| Vanguard Global vs. Vanguard Global Wellesley | Vanguard Global vs. Vanguard Global Wellington | Vanguard Global vs. Vanguard International Core | Vanguard Global vs. Vanguard Global Minimum |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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