Correlation Between Growth Income and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Growth Income and Templeton Developing 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 Income and Templeton Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Income Fund and Templeton Developing Markets, you can compare the effects of market volatilities on Growth Income and Templeton Developing 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 Income with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Income and Templeton Developing.
Diversification Opportunities for Growth Income and Templeton Developing
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Templeton is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Growth Income Fund and Templeton Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Developing and Growth Income 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 Income Fund are associated (or correlated) with Templeton Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Developing has no effect on the direction of Growth Income i.e., Growth Income and Templeton Developing go up and down completely randomly.
Pair Corralation between Growth Income and Templeton Developing
Assuming the 90 days horizon Growth Income Fund is expected to generate 0.74 times more return on investment than Templeton Developing. However, Growth Income Fund is 1.36 times less risky than Templeton Developing. It trades about 0.11 of its potential returns per unit of risk. Templeton Developing Markets is currently generating about 0.04 per unit of risk. If you would invest 2,171 in Growth Income Fund on September 12, 2024 and sell it today you would earn a total of 724.00 from holding Growth Income Fund or generate 33.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Income Fund vs. Templeton Developing Markets
Performance |
| Timeline |
| Growth Income |
| Templeton Developing |
Growth Income and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Income and Templeton Developing
The main advantage of trading using opposite Growth Income and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Income position performs unexpectedly, Templeton Developing 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 Developing will offset losses from the drop in Templeton Developing's long position.| Growth Income vs. Vanguard Total Stock | Growth Income vs. Vanguard 500 Index | Growth Income vs. Vanguard Total Stock | Growth Income vs. Vanguard Total Stock |
| Templeton Developing vs. Templeton Foreign Fund | Templeton Developing vs. Franklin Mutual Global | Templeton Developing vs. Templeton Growth Fund | Templeton Developing vs. Franklin Small Mid Cap |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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