Correlation Between Templeton Asian and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Templeton Asian and Dow Jones 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 Templeton Asian and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Asian Bond and Dow Jones Industrial, you can compare the effects of market volatilities on Templeton Asian and Dow Jones 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 Templeton Asian with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Asian and Dow Jones.
Diversification Opportunities for Templeton Asian and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Asian Bond and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Templeton Asian 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 Templeton Asian Bond are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Templeton Asian i.e., Templeton Asian and Dow Jones go up and down completely randomly.
Pair Corralation between Templeton Asian and Dow Jones
Assuming the 90 days trading horizon Templeton Asian Bond is expected to generate 0.57 times more return on investment than Dow Jones. However, Templeton Asian Bond is 1.75 times less risky than Dow Jones. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.02 per unit of risk. If you would invest 1,787 in Templeton Asian Bond on September 15, 2024 and sell it today you would earn a total of 13.00 from holding Templeton Asian Bond or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Asian Bond vs. Dow Jones Industrial
Performance |
| Timeline |
Templeton Asian and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Templeton Asian Bond
Pair trading matchups for Templeton Asian
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Templeton Asian and Dow Jones
The main advantage of trading using opposite Templeton Asian and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Asian position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Templeton Asian vs. Groupama Entreprises N | Templeton Asian vs. Renaissance Europe C | Templeton Asian vs. Superior Plus Corp | Templeton Asian vs. Origin Agritech |
| Dow Jones vs. Wallbox NV | Dow Jones vs. LithiumBank Resources Corp | Dow Jones vs. Marine Products | Dow Jones vs. Arrow Financial |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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