Correlation Between Short Precious and Templeton Foreign

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

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

Diversification Opportunities for Short Precious and Templeton Foreign

-0.73

Correlation Coefficient

Short Precious  Templeton Foreign

Pay attention - limited upside

The 3 months correlation between Short and Templeton is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Short Precious 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 Short Precious Metals 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 Short Precious i.e., Short Precious and Templeton Foreign go up and down completely randomly.

Pair Corralation between Short Precious and Templeton Foreign

Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Templeton Foreign. In addition to that, Short Precious is 1.94 times more volatile than Templeton Foreign Fund. It trades about -0.01 of its total potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.04 per unit of volatility. If you would invest  670.00  in Templeton Foreign Fund on September 20, 2024 and sell it today you would earn a total of  108.00  from holding Templeton Foreign Fund or generate 16.12% return on investment over 90 days.

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

Short Precious Metals  vs.  Templeton Foreign Fund

Short Precious Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Precious showed solid returns over the last few months and may actually be approaching a breakup point.

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 technical and fundamental 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 Short Precious and Templeton Foreign

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

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.