Correlation Between Tweedy Browne and Templeton Constrained

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

By analyzing existing cross correlation between Tweedy Browne Global and Templeton Strained Bond, you can compare the effects of market volatilities on Tweedy Browne and Templeton Constrained 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 Tweedy Browne with a short position of Templeton Constrained. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tweedy Browne and Templeton Constrained.

Diversification Opportunities for Tweedy Browne and Templeton Constrained

0.81

Correlation Coefficient

Tweedy Browne  Templeton Constrained

Very poor diversification

The 3 months correlation between Tweedy and Templeton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tweedy Browne Global and Templeton Strained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Strained Bond and Tweedy Browne 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 Tweedy Browne Global are associated (or correlated) with Templeton Constrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Strained Bond has no effect on the direction of Tweedy Browne i.e., Tweedy Browne and Templeton Constrained go up and down completely randomly.

Pair Corralation between Tweedy Browne and Templeton Constrained

Assuming the 90 days horizon Tweedy Browne Global is expected to generate 7.99 times more return on investment than Templeton Constrained. However, Tweedy Browne is 7.99 times more volatile than Templeton Strained Bond. It trades about 0.13 of its potential returns per unit of risk. Templeton Strained Bond is currently generating about 0.79 per unit of risk. If you would invest  1,592  in Tweedy Browne Global on May 4, 2025 and sell it today you would earn a total of  76.00  from holding Tweedy Browne Global or generate 4.77% return on investment over 90 days.

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

Tweedy Browne Global  vs.  Templeton Strained Bond

Tweedy Browne Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tweedy Browne Global are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tweedy Browne is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Strained Bond

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Strained Bond are ranked lower than 61 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Templeton Constrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tweedy Browne and Templeton Constrained

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

The idea behind Tweedy Browne Global and Templeton Strained Bond 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 Transaction History module to view history of all your transactions and understand their impact on performance.