Correlation Between Nasdaq-100 Index and Templeton Developing
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index 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 Nasdaq-100 Index and Templeton Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Templeton Developing Markets, you can compare the effects of market volatilities on Nasdaq-100 Index 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 Nasdaq-100 Index with a short position of Templeton Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Templeton Developing.
Diversification Opportunities for Nasdaq-100 Index and Templeton Developing
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq-100 and Templeton is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index 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 Nasdaq-100 Index 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 Nasdaq 100 Index 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 Nasdaq-100 Index i.e., Nasdaq-100 Index and Templeton Developing go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Templeton Developing
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.08 times more return on investment than Templeton Developing. However, Nasdaq-100 Index is 1.08 times more volatile than Templeton Developing Markets. It trades about 0.29 of its potential returns per unit of risk. Templeton Developing Markets is currently generating about -0.1 per unit of risk. If you would invest 5,016 in Nasdaq 100 Index Fund on September 5, 2024 and sell it today you would earn a total of 321.00 from holding Nasdaq 100 Index Fund or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Templeton Developing Markets
Performance |
| Timeline |
| Nasdaq 100 Index |
| Templeton Developing |
Nasdaq-100 Index and Templeton Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Templeton Developing
The main advantage of trading using opposite Nasdaq-100 Index and Templeton Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index 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.| Nasdaq-100 Index vs. Templeton Developing Markets | Nasdaq-100 Index vs. Fundvantage Trust | Nasdaq-100 Index vs. Mondrian Emerging Markets | Nasdaq-100 Index vs. Legg Mason Partners |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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