Correlation Between Astor Longshort and Templeton Foreign

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

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

Diversification Opportunities for Astor Longshort and Templeton Foreign

0.2

Correlation Coefficient

Astor Longshort  Templeton Foreign

Modest diversification

The 3 months correlation between Astor and Templeton is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Astor Longshort 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 Astor Longshort Fund 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 Astor Longshort i.e., Astor Longshort and Templeton Foreign go up and down completely randomly.

Pair Corralation between Astor Longshort and Templeton Foreign

Assuming the 90 days horizon Astor Longshort Fund is expected to generate 0.88 times more return on investment than Templeton Foreign. However, Astor Longshort Fund is 1.14 times less risky than Templeton Foreign. It trades about -0.03 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.04 per unit of risk. If you would invest  1,333  in Astor Longshort Fund on September 29, 2024 and sell it today you would lose (48.00) from holding Astor Longshort Fund or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astor Longshort Fund  vs.  Templeton Foreign Fund

Astor Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Templeton Foreign

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Foreign Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Astor Longshort and Templeton Foreign

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

The idea behind Astor Longshort Fund and Templeton Foreign Fund 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.