Correlation Between Templeton Growth and Kentucky Tax

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Can any of the company-specific risk be diversified away by investing in both Templeton Growth and Kentucky Tax 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 Kentucky Tax 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 Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on Templeton Growth and Kentucky Tax 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 Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Kentucky Tax.

Diversification Opportunities for Templeton Growth and Kentucky Tax

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Templeton and Kentucky is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth Fund and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Templeton Growth i.e., Templeton Growth and Kentucky Tax go up and down completely randomly.

Pair Corralation between Templeton Growth and Kentucky Tax

Assuming the 90 days horizon Templeton Growth Fund is expected to generate 5.52 times more return on investment than Kentucky Tax. However, Templeton Growth is 5.52 times more volatile than Kentucky Tax Free Short To Medium. It trades about 0.03 of its potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about 0.0 per unit of risk. If you would invest  2,715  in Templeton Growth Fund on September 14, 2024 and sell it today you would earn a total of  27.00  from holding Templeton Growth Fund or generate 0.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Templeton Growth Fund  vs.  Kentucky Tax Free Short To Med

 Performance 
       Timeline  
Templeton Growth 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Growth Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Templeton Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Kentucky Tax Free 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kentucky Tax Free Short To Medium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Kentucky Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Growth and Kentucky Tax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Templeton Growth and Kentucky Tax

The main advantage of trading using opposite Templeton Growth and Kentucky Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth position performs unexpectedly, Kentucky Tax 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 Kentucky Tax will offset losses from the drop in Kentucky Tax's long position.
The idea behind Templeton Growth Fund and Kentucky Tax Free Short To Medium 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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