Correlation Between Us High and Templeton Foreign

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

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

Diversification Opportunities for Us High and Templeton Foreign

-0.55

Correlation Coefficient

Us High  Templeton Foreign

Excellent diversification

The 3 months correlation between DURPX and Templeton is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Us High Relative and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Us High 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 Us High Relative 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 Us High i.e., Us High and Templeton Foreign go up and down completely randomly.

Pair Corralation between Us High and Templeton Foreign

Assuming the 90 days horizon Us High is expected to generate 2.41 times less return on investment than Templeton Foreign. But when comparing it to its historical volatility, Us High Relative is 1.04 times less risky than Templeton Foreign. It trades about 0.06 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  804.00  in Templeton Foreign Fund on September 13, 2024 and sell it today you would earn a total of  15.00  from holding Templeton Foreign Fund or generate 1.87% return on investment over 90 days.

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

Us High Relative  vs.  Templeton Foreign Fund

Us High Relative

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us High Relative are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Us High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 fairly strong technical and fundamental indicators, Templeton Foreign is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us High and Templeton Foreign

The main advantage of trading using opposite Us High and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us High 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 Us High Relative 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .