Correlation Between Templeton Constrained and Bny Mellon

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

By analyzing existing cross correlation between Templeton Strained Bond and Bny Mellon Strategic, you can compare the effects of market volatilities on Templeton Constrained and Bny Mellon 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 Constrained with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Constrained and Bny Mellon.

Diversification Opportunities for Templeton Constrained and Bny Mellon

0.62

Correlation Coefficient

Templeton Constrained  Bny Mellon

Poor diversification

The 3 months correlation between Templeton and Bny is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Strained Bond and Bny Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Strategic and Templeton Constrained 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 Strained Bond are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Strategic has no effect on the direction of Templeton Constrained i.e., Templeton Constrained and Bny Mellon go up and down completely randomly.

Pair Corralation between Templeton Constrained and Bny Mellon

Assuming the 90 days horizon Templeton Strained Bond is expected to generate 0.09 times more return on investment than Bny Mellon. However, Templeton Strained Bond is 11.03 times less risky than Bny Mellon. It trades about 0.57 of its potential returns per unit of risk. Bny Mellon Strategic is currently generating about 0.02 per unit of risk. If you would invest  999.00  in Templeton Strained Bond on December 29, 2024 and sell it today you would earn a total of  21.00  from holding Templeton Strained Bond or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Templeton Strained Bond  vs.  Bny Mellon Strategic

Templeton Strained Bond

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Strained Bond are ranked lower than 45 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Templeton Constrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bny Mellon Strategic

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Strategic are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Templeton Constrained and Bny Mellon

The main advantage of trading using opposite Templeton Constrained and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Constrained position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.

The idea behind Templeton Strained Bond and Bny Mellon Strategic 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.