Correlation Between Blackrock Fundamental and Templeton Foreign

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

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

Diversification Opportunities for Blackrock Fundamental and Templeton Foreign

-0.7

Correlation Coefficient

Blackrock Fundamental  Templeton Foreign

Excellent diversification

The 3 months correlation between Blackrock and Templeton is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Fundamental Growth and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign and Blackrock Fundamental 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 Blackrock Fundamental Growth are associated (or correlated) with Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Blackrock Fundamental i.e., Blackrock Fundamental and Templeton Foreign go up and down completely randomly.

Pair Corralation between Blackrock Fundamental and Templeton Foreign

Assuming the 90 days horizon Blackrock Fundamental Growth is expected to generate 1.05 times more return on investment than Templeton Foreign. However, Blackrock Fundamental is 1.05 times more volatile than Templeton Foreign Fund. It trades about 0.11 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.06 per unit of risk. If you would invest  4,148  in Blackrock Fundamental Growth on September 17, 2024 and sell it today you would earn a total of  303.00  from holding Blackrock Fundamental Growth or generate 7.3% return on investment over 90 days.

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

Blackrock Fundamental Growth  vs.  Templeton Foreign Fund

Blackrock Fundamental

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Fundamental Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Blackrock Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Templeton Foreign

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Foreign Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Templeton Foreign is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Fundamental and Templeton Foreign

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

The idea behind Blackrock Fundamental Growth and Templeton Foreign Fund 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.