Correlation Between Invesco China and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Invesco China and Franklin FTSE 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 Invesco China and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and Franklin FTSE South, you can compare the effects of market volatilities on Invesco China and Franklin FTSE 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 Invesco China with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and Franklin FTSE.
Diversification Opportunities for Invesco China and Franklin FTSE
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Franklin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and Franklin FTSE South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE South and Invesco China 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 Invesco China Technology are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE South has no effect on the direction of Invesco China i.e., Invesco China and Franklin FTSE go up and down completely randomly.
Pair Corralation between Invesco China and Franklin FTSE
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.9 times more return on investment than Franklin FTSE. However, Invesco China is 1.9 times more volatile than Franklin FTSE South. It trades about 0.05 of its potential returns per unit of risk. Franklin FTSE South is currently generating about -0.05 per unit of risk. If you would invest 3,538 in Invesco China Technology on September 3, 2024 and sell it today you would earn a total of 519.00 from holding Invesco China Technology or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. Franklin FTSE South
Performance |
| Timeline |
| Invesco China Technology |
| Franklin FTSE South |
Invesco China and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and Franklin FTSE
The main advantage of trading using opposite Invesco China and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China position performs unexpectedly, Franklin FTSE 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 FTSE will offset losses from the drop in Franklin FTSE's long position.| Invesco China vs. Franklin FTSE South | Invesco China vs. Franklin FTSE Japan | Invesco China vs. Franklin FTSE India | Invesco China vs. Franklin FTSE Brazil |
| Franklin FTSE vs. Franklin FTSE Japan | Franklin FTSE vs. Franklin FTSE Taiwan | Franklin FTSE vs. Franklin FTSE China | Franklin FTSE vs. Franklin FTSE Brazil |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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