Correlation Between Templeton Emerging and Calvert International

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

By analyzing existing cross correlation between Templeton Emerging Markets and Calvert International Opportunities, you can compare the effects of market volatilities on Templeton Emerging and Calvert International 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 Emerging with a short position of Calvert International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Calvert International.

Diversification Opportunities for Templeton Emerging and Calvert International

0.83

Correlation Coefficient

Templeton Emerging  Calvert International

Very poor diversification

The 3 months correlation between Templeton and Calvert is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Calvert International Opportun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert International and Templeton Emerging 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 Emerging Markets are associated (or correlated) with Calvert International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert International has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Calvert International go up and down completely randomly.

Pair Corralation between Templeton Emerging and Calvert International

Assuming the 90 days horizon Templeton Emerging Markets is expected to under-perform the Calvert International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton Emerging Markets is 1.74 times less risky than Calvert International. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Calvert International Opportunities is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,833  in Calvert International Opportunities on September 5, 2024 and sell it today you would lose (32.00) from holding Calvert International Opportunities or give up 1.75% of portfolio value over 90 days.

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

Templeton Emerging Markets  vs.  Calvert International Opportun

Templeton Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Calvert International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Templeton Emerging and Calvert International

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

The idea behind Templeton Emerging Markets and Calvert International Opportunities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.