Correlation Between Templeton Emerging and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Templeton Emerging and Aberdeen China 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 Emerging and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Emerging Markets and Aberdeen China Oppty, you can compare the effects of market volatilities on Templeton Emerging and Aberdeen China 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 Emerging with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Emerging and Aberdeen China.
Diversification Opportunities for Templeton Emerging and Aberdeen China
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Templeton and Aberdeen is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty and Templeton Emerging 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 Emerging Markets are associated (or correlated) with Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Aberdeen China go up and down completely randomly.
Pair Corralation between Templeton Emerging and Aberdeen China
Assuming the 90 days horizon Templeton Emerging Markets is expected to generate 0.5 times more return on investment than Aberdeen China. However, Templeton Emerging Markets is 2.01 times less risky than Aberdeen China. It trades about 0.07 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.03 per unit of risk. If you would invest 1,119 in Templeton Emerging Markets on September 5, 2024 and sell it today you would earn a total of 254.00 from holding Templeton Emerging Markets or generate 22.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Templeton Emerging Markets vs. Aberdeen China Oppty
Performance |
| Timeline |
| Templeton Emerging |
| Aberdeen China Oppty |
Templeton Emerging and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Emerging and Aberdeen China
The main advantage of trading using opposite Templeton Emerging and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging position performs unexpectedly, Aberdeen China 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 China will offset losses from the drop in Aberdeen China's long position.| Templeton Emerging vs. T Rowe Price | Templeton Emerging vs. T Rowe Price | Templeton Emerging vs. Legg Mason Partners | Templeton Emerging vs. Hood River New |
| Aberdeen China vs. Legg Mason Partners | Aberdeen China vs. Transamerica Emerging Markets | Aberdeen China vs. Barings Emerging Markets | Aberdeen China vs. Templeton Emerging Markets |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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