Correlation Between Aberdeen Japan and Templeton Dragon
Can any of the company-specific risk be diversified away by investing in both Aberdeen Japan and Templeton Dragon 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 Japan and Templeton Dragon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Japan Equity and Templeton Dragon Closed, you can compare the effects of market volatilities on Aberdeen Japan and Templeton Dragon 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 Japan with a short position of Templeton Dragon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Japan and Templeton Dragon.
Diversification Opportunities for Aberdeen Japan and Templeton Dragon
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aberdeen and Templeton is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Japan Equity and Templeton Dragon Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Dragon Closed and Aberdeen Japan 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 Japan Equity are associated (or correlated) with Templeton Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Dragon Closed has no effect on the direction of Aberdeen Japan i.e., Aberdeen Japan and Templeton Dragon go up and down completely randomly.
Pair Corralation between Aberdeen Japan and Templeton Dragon
Considering the 90-day investment horizon Aberdeen Japan is expected to generate 2.73 times less return on investment than Templeton Dragon. But when comparing it to its historical volatility, Aberdeen Japan Equity is 1.1 times less risky than Templeton Dragon. It trades about 0.12 of its potential returns per unit of risk. Templeton Dragon Closed is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 838.00 in Templeton Dragon Closed on November 2, 2024 and sell it today you would earn a total of 54.00 from holding Templeton Dragon Closed or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Japan Equity vs. Templeton Dragon Closed
Performance |
| Timeline |
| Aberdeen Japan Equity |
| Templeton Dragon Closed |
Aberdeen Japan and Templeton Dragon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Japan and Templeton Dragon
The main advantage of trading using opposite Aberdeen Japan and Templeton Dragon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Japan position performs unexpectedly, Templeton Dragon 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 Dragon will offset losses from the drop in Templeton Dragon's long position.| Aberdeen Japan vs. Ultramid Cap Profund Ultramid Cap | Aberdeen Japan vs. Ab Small Cap | Aberdeen Japan vs. Mid Cap Growth Profund | Aberdeen Japan vs. Applied Finance Explorer |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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