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 Markets, 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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Templeton and Templeton is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Asian Bond and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 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 Bond is expected to generate 0.49 times more return on investment than Templeton Emerging. However, Templeton Asian Bond is 2.06 times less risky than Templeton Emerging. It trades about 0.01 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 1,788 in Templeton Asian Bond on October 25, 2024 and sell it today you would earn a total of 2.00 from holding Templeton Asian Bond or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Asian Bond vs. Templeton Emerging Markets
Performance |
| Timeline |
| Templeton Asian Bond |
| Templeton Emerging |
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. Templeton Global AD | Templeton Asian vs. Templeton Global Bond | Templeton Asian vs. Templeton Global Bond | Templeton Asian vs. Templeton Emerging Markets |
| Templeton Emerging vs. Templeton Global AD | Templeton Emerging vs. Templeton Global Bond | Templeton Emerging vs. Templeton Asian Bond | Templeton Emerging vs. Templeton Global Bond |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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