Correlation Between Templeton World and Western Asset
Can any of the company-specific risk be diversified away by investing in both Templeton World and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Templeton World and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Western Asset.
Diversification Opportunities for Templeton World and Western Asset
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Templeton and Western is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Templeton World i.e., Templeton World and Western Asset go up and down completely randomly.
Pair Corralation between Templeton World and Western Asset
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.77 times more return on investment than Western Asset. However, Templeton World is 1.77 times more volatile than Western Asset E. It trades about 0.1 of its potential returns per unit of risk. Western Asset E is currently generating about 0.02 per unit of risk. If you would invest 1,186 in Templeton World Fund on August 29, 2024 and sell it today you would earn a total of 610.00 from holding Templeton World Fund or generate 51.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Western Asset E
Performance |
| Timeline |
| Templeton World |
| Western Asset E |
Templeton World and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Western Asset
The main advantage of trading using opposite Templeton World and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Templeton World vs. Jhancock Diversified Macro | Templeton World vs. Evaluator Conservative Rms | Templeton World vs. American Funds Conservative | Templeton World vs. Guggenheim Diversified Income |
| Western Asset vs. Vanguard Equity Income | Western Asset vs. Calamos Global Equity | Western Asset vs. Balanced Fund Retail | Western Asset vs. Ms Global Fixed |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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