Correlation Between Templeton World and Clearbridge Appreciation
Can any of the company-specific risk be diversified away by investing in both Templeton World and Clearbridge Appreciation 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 World and Clearbridge Appreciation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Clearbridge Appreciation Fund, you can compare the effects of market volatilities on Templeton World and Clearbridge Appreciation 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 World with a short position of Clearbridge Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Clearbridge Appreciation.
Diversification Opportunities for Templeton World and Clearbridge Appreciation
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and Clearbridge is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation and Templeton World 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 World Fund are associated (or correlated) with Clearbridge Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Templeton World i.e., Templeton World and Clearbridge Appreciation go up and down completely randomly.
Pair Corralation between Templeton World and Clearbridge Appreciation
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.28 times more return on investment than Clearbridge Appreciation. However, Templeton World is 1.28 times more volatile than Clearbridge Appreciation Fund. It trades about 0.11 of its potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.13 per unit of risk. If you would invest 1,420 in Templeton World Fund on August 26, 2024 and sell it today you would earn a total of 366.00 from holding Templeton World Fund or generate 25.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Clearbridge Appreciation Fund
Performance |
| Timeline |
| Templeton World |
| Clearbridge Appreciation |
Templeton World and Clearbridge Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Clearbridge Appreciation
The main advantage of trading using opposite Templeton World and Clearbridge Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Clearbridge Appreciation 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 Clearbridge Appreciation will offset losses from the drop in Clearbridge Appreciation's long position.| Templeton World vs. Fidelity Managed Retirement | Templeton World vs. Transamerica Cleartrack Retirement | Templeton World vs. Franklin Lifesmart Retirement | Templeton World vs. Qs Moderate Growth |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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