Correlation Between Ab Global and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Ab Global and Templeton Growth 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 Ab Global and Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Templeton Growth Fund, you can compare the effects of market volatilities on Ab Global and Templeton Growth 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 Ab Global with a short position of Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Templeton Growth.
Diversification Opportunities for Ab Global and Templeton Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GCEAX and Templeton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth and Ab 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 Ab Global E are associated (or correlated) with Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Ab Global i.e., Ab Global and Templeton Growth go up and down completely randomly.
Pair Corralation between Ab Global and Templeton Growth
Assuming the 90 days horizon Ab Global is expected to generate 125.0 times less return on investment than Templeton Growth. But when comparing it to its historical volatility, Ab Global E is 1.08 times less risky than Templeton Growth. It trades about 0.0 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,612 in Templeton Growth Fund on January 25, 2024 and sell it today you would earn a total of 53.00 from holding Templeton Growth Fund or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Ab Global E vs. Templeton Growth Fund
Performance |
| Timeline |
| Ab Global E |
| Templeton Growth |
Ab Global and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Templeton Growth
The main advantage of trading using opposite Ab Global and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Templeton Growth 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 Growth will offset losses from the drop in Templeton Growth's long position.| Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global vs. Capital World Growth |
| Templeton Growth vs. American Funds Capital | Templeton Growth vs. American Funds Capital | Templeton Growth vs. Capital World Growth | Templeton Growth vs. Capital World Growth |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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