Correlation Between Templeton Global and Clearbridge Dividend

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

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

Diversification Opportunities for Templeton Global and Clearbridge Dividend

-0.75

Correlation Coefficient

Templeton Global  Clearbridge Dividend

Pay attention - limited upside

The 3 months correlation between Templeton and Clearbridge is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Clearbridge Dividend Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Dividend and Templeton Global 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 Global Bond are associated (or correlated) with Clearbridge Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Dividend has no effect on the direction of Templeton Global i.e., Templeton Global and Clearbridge Dividend go up and down completely randomly.

Pair Corralation between Templeton Global and Clearbridge Dividend

Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Clearbridge Dividend. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Global Bond is 1.08 times less risky than Clearbridge Dividend. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Clearbridge Dividend Strategy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,067  in Clearbridge Dividend Strategy on September 5, 2024 and sell it today you would earn a total of  239.00  from holding Clearbridge Dividend Strategy or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Templeton Global Bond  vs.  Clearbridge Dividend Strategy

Templeton Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Clearbridge Dividend

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Dividend Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Templeton Global and Clearbridge Dividend

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

The idea behind Templeton Global Bond and Clearbridge Dividend Strategy 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.