Correlation Between Foreign Bond and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Templeton Global 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 Foreign Bond and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Templeton Global Bond, you can compare the effects of market volatilities on Foreign Bond and Templeton Global 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 Foreign Bond with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Templeton Global.
Diversification Opportunities for Foreign Bond and Templeton Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foreign and Templeton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Foreign Bond 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 Foreign Bond Fund are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Foreign Bond i.e., Foreign Bond and Templeton Global go up and down completely randomly.
Pair Corralation between Foreign Bond and Templeton Global
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.59 times more return on investment than Templeton Global. However, Foreign Bond Fund is 1.7 times less risky than Templeton Global. It trades about -0.31 of its potential returns per unit of risk. Templeton Global Bond is currently generating about -0.38 per unit of risk. If you would invest 753.00 in Foreign Bond Fund on January 26, 2024 and sell it today you would lose (16.00) from holding Foreign Bond Fund or give up 2.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Foreign Bond Fund vs. Templeton Global Bond
Performance |
Timeline |
Foreign Bond |
Templeton Global Bond |
Foreign Bond and Templeton Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Foreign Bond and Templeton Global
The main advantage of trading using opposite Foreign Bond and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Templeton Global 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 Global will offset losses from the drop in Templeton Global's long position.Foreign Bond vs. Gold And Precious | Foreign Bond vs. International Investors Gold | Foreign Bond vs. Gamco Global Gold | Foreign Bond vs. Franklin Gold Precious |
Templeton Global vs. Sprott Gold Equity | Templeton Global vs. Global Gold Fund | Templeton Global vs. First Eagle Gold | Templeton Global vs. Purpose Silver Bullion |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |