Correlation Between Templeton Asian and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Templeton Asian and Templeton Emerging 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 Templeton Emerging 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 Templeton Emerging Mkt, you can compare the effects of market volatilities on Templeton Asian and Templeton Emerging 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 Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Asian and Templeton Emerging.
Diversification Opportunities for Templeton Asian and Templeton Emerging
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Templeton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Asian Bond and Templeton Emerging Mkt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging Mkt 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 Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging Mkt has no effect on the direction of Templeton Asian i.e., Templeton Asian and Templeton Emerging go up and down completely randomly.
Pair Corralation between Templeton Asian and Templeton Emerging
Assuming the 90 days trading horizon Templeton Asian is expected to generate 1.31 times less return on investment than Templeton Emerging. But when comparing it to its historical volatility, Templeton Asian Bond is 1.39 times less risky than Templeton Emerging. It trades about 0.23 of its potential returns per unit of risk. Templeton Emerging Mkt is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 621.00 in Templeton Emerging Mkt on September 5, 2024 and sell it today you would earn a total of 18.00 from holding Templeton Emerging Mkt or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Asian Bond vs. Templeton Emerging Mkt
Performance |
| Timeline |
| Templeton Asian Bond |
| Templeton Emerging Mkt |
Templeton Asian and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Asian and Templeton Emerging
The main advantage of trading using opposite Templeton Asian and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Asian position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's 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 |
| Templeton Emerging vs. Templeton Global Bond | Templeton Emerging vs. Templeton Asian Bond | Templeton Emerging vs. Templeton Global Bond | Templeton Emerging vs. Templeton Emerging Markets |
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 Stocks Directory module to find actively traded stocks across global markets.
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