Correlation Between Templeton Emerging and Templeton Global

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

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

Diversification Opportunities for Templeton Emerging and Templeton Global

-0.22

Correlation Coefficient

Templeton Emerging  Templeton Global

Very good diversification

The 3 months correlation between Templeton and Templeton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Templeton Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Income and Templeton Emerging 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 Emerging Markets 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 Income has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Templeton Global go up and down completely randomly.

Pair Corralation between Templeton Emerging and Templeton Global

Considering the 90-day investment horizon Templeton Emerging Markets is expected to generate 1.28 times more return on investment than Templeton Global. However, Templeton Emerging is 1.28 times more volatile than Templeton Global Income. It trades about 0.04 of its potential returns per unit of risk. Templeton Global Income is currently generating about 0.04 per unit of risk. If you would invest  1,023  in Templeton Emerging Markets on September 19, 2024 and sell it today you would earn a total of  181.00  from holding Templeton Emerging Markets or generate 17.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.63%
Values	Daily Returns

Templeton Emerging Markets  vs.  Templeton Global Income

Templeton Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable primary indicators, Templeton Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Templeton Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Global Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy forward indicators, Templeton Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Templeton Emerging and Templeton Global

The main advantage of trading using opposite Templeton Emerging and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging 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 Templeton Emerging Markets and Templeton Global Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.