Correlation Between Aberdeen New and Franklin Libertyshares
Can any of the company-specific risk be diversified away by investing in both Aberdeen New and Franklin Libertyshares 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 Aberdeen New and Franklin Libertyshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen New India and Franklin Libertyshares ICAV, you can compare the effects of market volatilities on Aberdeen New and Franklin Libertyshares 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 Aberdeen New with a short position of Franklin Libertyshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen New and Franklin Libertyshares.
Diversification Opportunities for Aberdeen New and Franklin Libertyshares
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aberdeen and Franklin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen New India and Franklin Libertyshares ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Libertyshares and Aberdeen New 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 Aberdeen New India are associated (or correlated) with Franklin Libertyshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Libertyshares has no effect on the direction of Aberdeen New i.e., Aberdeen New and Franklin Libertyshares go up and down completely randomly.
Pair Corralation between Aberdeen New and Franklin Libertyshares
Assuming the 90 days trading horizon Aberdeen New India is expected to generate 1.04 times more return on investment than Franklin Libertyshares. However, Aberdeen New is 1.04 times more volatile than Franklin Libertyshares ICAV. It trades about 0.1 of its potential returns per unit of risk. Franklin Libertyshares ICAV is currently generating about 0.03 per unit of risk. If you would invest 55,200 in Aberdeen New India on August 31, 2024 and sell it today you would earn a total of 23,400 from holding Aberdeen New India or generate 42.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen New India vs. Franklin Libertyshares ICAV
Performance |
| Timeline |
| Aberdeen New India |
| Franklin Libertyshares |
Aberdeen New and Franklin Libertyshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen New and Franklin Libertyshares
The main advantage of trading using opposite Aberdeen New and Franklin Libertyshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen New position performs unexpectedly, Franklin Libertyshares 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 Franklin Libertyshares will offset losses from the drop in Franklin Libertyshares' long position.| Aberdeen New vs. iShares MSCI Japan | Aberdeen New vs. Amundi EUR High | Aberdeen New vs. iShares JP Morgan | Aberdeen New vs. Xtrackers MSCI |
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 Stocks Directory module to find actively traded stocks across global markets.
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