Correlation Between Azvalor Global and Templeton Global

Can any of the company-specific risk be diversified away by investing in both Azvalor Global 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 Azvalor Global and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Azvalor Global Value and Templeton Global AD, you can compare the effects of market volatilities on Azvalor Global 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 Azvalor Global with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azvalor Global and Templeton Global.

Diversification Opportunities for Azvalor Global and Templeton Global

0.27

Correlation Coefficient

Azvalor Global  Templeton Global

Modest diversification

The 3 months correlation between Azvalor and Templeton is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Azvalor Global Value and Templeton Global AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global and Azvalor Global 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 Azvalor Global Value 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 has no effect on the direction of Azvalor Global i.e., Azvalor Global and Templeton Global go up and down completely randomly.

Pair Corralation between Azvalor Global and Templeton Global

Assuming the 90 days trading horizon Azvalor Global Value is expected to generate 0.83 times more return on investment than Templeton Global. However, Azvalor Global Value is 1.2 times less risky than Templeton Global. It trades about -0.22 of its potential returns per unit of risk. Templeton Global AD is currently generating about -0.25 per unit of risk. If you would invest  19,948  in Azvalor Global Value on September 21, 2024 and sell it today you would lose (777.00) from holding Azvalor Global Value or give up 3.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Azvalor Global Value  vs.  Templeton Global AD

Azvalor Global Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azvalor Global Value has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Azvalor Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Global AD has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Azvalor Global and Templeton Global

The main advantage of trading using opposite Azvalor Global and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azvalor Global 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.

The idea behind Azvalor Global Value and Templeton Global AD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.