Correlation Between Templeton Dragon and Aberdeen Australia
Can any of the company-specific risk be diversified away by investing in both Templeton Dragon and Aberdeen Australia 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 Templeton Dragon and Aberdeen Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Dragon Closed and Aberdeen Australia Ef, you can compare the effects of market volatilities on Templeton Dragon and Aberdeen Australia 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 Templeton Dragon with a short position of Aberdeen Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Dragon and Aberdeen Australia.
Diversification Opportunities for Templeton Dragon and Aberdeen Australia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Templeton and Aberdeen is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Dragon Closed and Aberdeen Australia Ef in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Australia and Templeton Dragon 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 Templeton Dragon Closed are associated (or correlated) with Aberdeen Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Australia has no effect on the direction of Templeton Dragon i.e., Templeton Dragon and Aberdeen Australia go up and down completely randomly.
Pair Corralation between Templeton Dragon and Aberdeen Australia
Considering the 90-day investment horizon Templeton Dragon Closed is expected to generate 1.17 times more return on investment than Aberdeen Australia. However, Templeton Dragon is 1.17 times more volatile than Aberdeen Australia Ef. It trades about 0.29 of its potential returns per unit of risk. Aberdeen Australia Ef is currently generating about 0.22 per unit of risk. 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 |
Templeton Dragon Closed vs. Aberdeen Australia Ef
Performance |
| Timeline |
| Templeton Dragon Closed |
| Aberdeen Australia |
Templeton Dragon and Aberdeen Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Dragon and Aberdeen Australia
The main advantage of trading using opposite Templeton Dragon and Aberdeen Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Dragon position performs unexpectedly, Aberdeen Australia 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 Australia will offset losses from the drop in Aberdeen Australia's long position.| Templeton Dragon vs. Nuveen Municipalome | Templeton Dragon vs. Western Asset Investment | Templeton Dragon vs. Templeton Emerging Markets | Templeton Dragon vs. Tekla Life Sciences |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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