Correlation Between Target Retirement and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Target Retirement and Templeton Global 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 Target Retirement and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Templeton Global Bond, you can compare the effects of market volatilities on Target Retirement and Templeton Global 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 Target Retirement with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Templeton Global.
Diversification Opportunities for Target Retirement and Templeton Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Target and Templeton is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Target Retirement 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 Target Retirement 2040 are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Target Retirement i.e., Target Retirement and Templeton Global go up and down completely randomly.
Pair Corralation between Target Retirement and Templeton Global
Assuming the 90 days horizon Target Retirement 2040 is expected to generate 1.23 times more return on investment than Templeton Global. However, Target Retirement is 1.23 times more volatile than Templeton Global Bond. It trades about 0.02 of its potential returns per unit of risk. Templeton Global Bond is currently generating about -0.05 per unit of risk. If you would invest 1,292 in Target Retirement 2040 on October 19, 2024 and sell it today you would earn a total of 17.00 from holding Target Retirement 2040 or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Retirement 2040 vs. Templeton Global Bond
Performance |
| Timeline |
| Target Retirement 2040 |
| Templeton Global Bond |
Target Retirement and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Templeton Global
The main advantage of trading using opposite Target Retirement and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.| Target Retirement vs. T Rowe Price | Target Retirement vs. Nuveen Strategic Municipal | Target Retirement vs. Blrc Sgy Mnp | Target Retirement vs. Access Capital Munity |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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