Correlation Between Templeton Growth and Ab Global
Can any of the company-specific risk be diversified away by investing in both Templeton Growth and Ab 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 Templeton Growth and Ab Global 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 Ab Global E, you can compare the effects of market volatilities on Templeton Growth and Ab 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 Templeton Growth with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Ab Global.
Diversification Opportunities for Templeton Growth and Ab Global
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and GCECX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Templeton Growth i.e., Templeton Growth and Ab Global go up and down completely randomly.
Pair Corralation between Templeton Growth and Ab Global
Assuming the 90 days horizon Templeton Growth Fund is expected to generate 1.08 times more return on investment than Ab Global. However, Templeton Growth is 1.08 times more volatile than Ab Global E. It trades about -0.12 of its potential returns per unit of risk. Ab Global E is currently generating about -0.16 per unit of risk. If you would invest 2,718 in Templeton Growth Fund on January 25, 2024 and sell it today you would lose (55.00) from holding Templeton Growth Fund or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Templeton Growth Fund vs. Ab Global E
Performance |
| Timeline |
| Templeton Growth |
| Ab Global E |
Templeton Growth and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Ab Global
The main advantage of trading using opposite Templeton Growth and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth position performs unexpectedly, Ab 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 Ab Global will offset losses from the drop in Ab Global's long position.| Templeton Growth vs. American Funds Capital | Templeton Growth vs. American Funds Capital | Templeton Growth vs. Capital World Growth | Templeton Growth vs. Capital World Growth |
| Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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