Correlation Between Franklin High and Aberdeen Japan
Can any of the company-specific risk be diversified away by investing in both Franklin High and Aberdeen Japan 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 Franklin High and Aberdeen Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Yield and Aberdeen Japan Equity, you can compare the effects of market volatilities on Franklin High and Aberdeen Japan 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 Franklin High with a short position of Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Aberdeen Japan.
Diversification Opportunities for Franklin High and Aberdeen Japan
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Aberdeen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Yield and Aberdeen Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Japan Equity and Franklin High 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 Franklin High Yield are associated (or correlated) with Aberdeen Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Japan Equity has no effect on the direction of Franklin High i.e., Franklin High and Aberdeen Japan go up and down completely randomly.
Pair Corralation between Franklin High and Aberdeen Japan
Assuming the 90 days horizon Franklin High is expected to generate 2.34 times less return on investment than Aberdeen Japan. But when comparing it to its historical volatility, Franklin High Yield is 3.97 times less risky than Aberdeen Japan. It trades about 0.09 of its potential returns per unit of risk. Aberdeen Japan Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 456.00 in Aberdeen Japan Equity on September 12, 2024 and sell it today you would earn a total of 134.00 from holding Aberdeen Japan Equity or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Yield vs. Aberdeen Japan Equity
Performance |
| Timeline |
| Franklin High Yield |
| Aberdeen Japan Equity |
Franklin High and Aberdeen Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Aberdeen Japan
The main advantage of trading using opposite Franklin High and Aberdeen Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Aberdeen Japan 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 Aberdeen Japan will offset losses from the drop in Aberdeen Japan's long position.| Franklin High vs. Nuveen High Yield | Franklin High vs. Nuveen High Yield | Franklin High vs. SCOR PK | Franklin High vs. Morningstar Unconstrained Allocation |
| Aberdeen Japan vs. Franklin High Yield | Aberdeen Japan vs. Bbh Intermediate Municipal | Aberdeen Japan vs. Ambrus Core Bond | Aberdeen Japan vs. T Rowe Price |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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