Correlation Between Templeton Global and Federated Government
Can any of the company-specific risk be diversified away by investing in both Templeton Global and Federated Government 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 Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Balanced and Federated Government Income, you can compare the effects of market volatilities on Templeton Global and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Federated Government.
Diversification Opportunities for Templeton Global and Federated Government
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Federated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Balanced and Federated Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Balanced are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Templeton Global i.e., Templeton Global and Federated Government go up and down completely randomly.
Pair Corralation between Templeton Global and Federated Government
Assuming the 90 days horizon Templeton Global Balanced is expected to generate 1.3 times more return on investment than Federated Government. However, Templeton Global is 1.3 times more volatile than Federated Government Income. It trades about 0.04 of its potential returns per unit of risk. Federated Government Income is currently generating about 0.01 per unit of risk. If you would invest 222.00 in Templeton Global Balanced on November 1, 2024 and sell it today you would earn a total of 26.00 from holding Templeton Global Balanced or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Balanced vs. Federated Government Income
Performance |
| Timeline |
| Templeton Global Balanced |
| Federated Government |
Templeton Global and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Federated Government
The main advantage of trading using opposite Templeton Global and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Templeton Global vs. Oppenheimer Gold Special | Templeton Global vs. Franklin Gold Precious | Templeton Global vs. First Eagle Gold | Templeton Global vs. Fidelity Advisor Gold |
| Federated Government vs. Enhanced Fixed Income | Federated Government vs. Aqr Long Short Equity | Federated Government vs. Us Vector Equity | Federated Government vs. Ab Servative Wealth |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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