Correlation Between Western Asset and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Templeton Global Bond, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Templeton Global.
Diversification Opportunities for Western Asset and Templeton Global
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and TEMPLETON is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Templeton Global go up and down completely randomly.
Pair Corralation between Western Asset and Templeton Global
Assuming the 90 days horizon Western Asset Inflation is expected to generate 0.48 times more return on investment than Templeton Global. However, Western Asset Inflation is 2.08 times less risky than Templeton Global. It trades about 0.05 of its potential returns per unit of risk. Templeton Global Bond is currently generating about -0.07 per unit of risk. If you would invest 935.00 in Western Asset Inflation on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Western Asset Inflation or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Templeton Global Bond
Performance |
| Timeline |
| Western Asset Inflation |
| Templeton Global Bond |
Western Asset and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Templeton Global
The main advantage of trading using opposite Western Asset and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Inflation Protected Securities | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International | Western Asset vs. Barloworld Ltd ADR |
| Templeton Global vs. Small Pany Growth | Templeton Global vs. Ab Small Cap | Templeton Global vs. Vanguard Strategic Small Cap | Templeton Global vs. Artisan Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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