Correlation Between Templeton World and New Perspective
Can any of the company-specific risk be diversified away by investing in both Templeton World and New Perspective 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 World and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and New Perspective Fund, you can compare the effects of market volatilities on Templeton World and New Perspective 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 World with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and New Perspective.
Diversification Opportunities for Templeton World and New Perspective
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Templeton and New is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Templeton World 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 World Fund are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Templeton World i.e., Templeton World and New Perspective go up and down completely randomly.
Pair Corralation between Templeton World and New Perspective
Assuming the 90 days horizon Templeton World Fund is expected to generate 1.23 times more return on investment than New Perspective. However, Templeton World is 1.23 times more volatile than New Perspective Fund. It trades about 0.13 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.09 per unit of risk. If you would invest 1,436 in Templeton World Fund on January 20, 2024 and sell it today you would earn a total of 102.00 from holding Templeton World Fund or generate 7.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Templeton World Fund vs. New Perspective Fund
Performance |
Timeline |
Templeton World |
New Perspective |
Templeton World and New Perspective Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Templeton World and New Perspective
The main advantage of trading using opposite Templeton World and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.Templeton World vs. Commonwealth Real Estate | Templeton World vs. Gamco Global Opportunity | Templeton World vs. HUMANA INC | Templeton World vs. Aquagold International |
New Perspective vs. Jhancock Diversified Macro | New Perspective vs. Gmo Emerging Markets | New Perspective vs. Calvert Developed Market | New Perspective vs. Transamerica Emerging Markets |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |