Correlation Between Growth Opportunities and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Templeton Emerging 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 Growth Opportunities and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Templeton Emerging Markets, you can compare the effects of market volatilities on Growth Opportunities and Templeton Emerging 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 Growth Opportunities with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Templeton Emerging.
Diversification Opportunities for Growth Opportunities and Templeton Emerging
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and Templeton is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Growth Opportunities 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 Growth Opportunities Fund are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Templeton Emerging go up and down completely randomly.
Pair Corralation between Growth Opportunities and Templeton Emerging
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 1.78 times more return on investment than Templeton Emerging. However, Growth Opportunities is 1.78 times more volatile than Templeton Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 5,174 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 682.00 from holding Growth Opportunities Fund or generate 13.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Growth Opportunities Fund vs. Templeton Emerging Markets
Performance |
Timeline |
Growth Opportunities |
Templeton Emerging |
Growth Opportunities and Templeton Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Growth Opportunities and Templeton Emerging
The main advantage of trading using opposite Growth Opportunities and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Templeton Emerging 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 Templeton Emerging will offset losses from the drop in Templeton Emerging's long position.Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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