Correlation Between Templeton Growth and William Blair

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

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

Diversification Opportunities for Templeton Growth and William Blair

-0.55

Correlation Coefficient

Templeton Growth  William Blair

Excellent diversification

The 3 months correlation between Templeton and William is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and William Blair Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Emerging and Templeton Growth 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 Growth Fund are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Emerging has no effect on the direction of Templeton Growth i.e., Templeton Growth and William Blair go up and down completely randomly.

Pair Corralation between Templeton Growth and William Blair

Assuming the 90 days horizon Templeton Growth Fund is expected to generate 0.92 times more return on investment than William Blair. However, Templeton Growth Fund is 1.08 times less risky than William Blair. It trades about 0.02 of its potential returns per unit of risk. William Blair Emerging is currently generating about -0.19 per unit of risk. If you would invest  2,625  in Templeton Growth Fund on December 30, 2024 and sell it today you would earn a total of  26.00  from holding Templeton Growth Fund or generate 0.99% return on investment over 90 days.

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

Templeton Growth Fund  vs.  William Blair Emerging

Templeton Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Growth Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Templeton Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

William Blair Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Templeton Growth and William Blair

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

The idea behind Templeton Growth Fund and William Blair Emerging 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.