Correlation Between Western Asset and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Western Asset and Templeton Foreign 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 Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Templeton Foreign Fund, you can compare the effects of market volatilities on Western Asset and Templeton Foreign 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 Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Templeton Foreign.
Diversification Opportunities for Western Asset and Templeton Foreign
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Templeton is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 High are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Western Asset i.e., Western Asset and Templeton Foreign go up and down completely randomly.
Pair Corralation between Western Asset and Templeton Foreign
Assuming the 90 days horizon Western Asset is expected to generate 2.52 times less return on investment than Templeton Foreign. But when comparing it to its historical volatility, Western Asset High is 3.57 times less risky than Templeton Foreign. It trades about 0.23 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 758.00 in Templeton Foreign Fund on October 20, 2024 and sell it today you would earn a total of 19.00 from holding Templeton Foreign Fund or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Templeton Foreign Fund
Performance |
| Timeline |
| Western Asset High |
| Templeton Foreign |
Western Asset and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Templeton Foreign
The main advantage of trading using opposite Western Asset and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Templeton Foreign 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 Foreign will offset losses from the drop in Templeton Foreign's long position.| Western Asset vs. Leader Short Term Bond | Western Asset vs. Aamhimco Short Duration | Western Asset vs. Aqr Sustainable Long Short | Western Asset vs. Prudential Short Duration |
| Templeton Foreign vs. Rational Defensive Growth | Templeton Foreign vs. Mid Cap Growth | Templeton Foreign vs. Calamos Growth Fund | Templeton Foreign vs. Transamerica Capital Growth |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |