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 China, 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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and Franklin FTSE China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE China 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 China 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 is expected to generate 1.28 times less return on investment than Franklin FTSE. In addition to that, Invesco China is 1.26 times more volatile than Franklin FTSE China. It trades about 0.09 of its total potential returns per unit of risk. Franklin FTSE China is currently generating about 0.15 per unit of volatility. If you would invest 1,856 in Franklin FTSE China on December 29, 2024 and sell it today you would earn a total of 286.00 from holding Franklin FTSE China or generate 15.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco China Technology vs. Franklin FTSE China
Performance |
Timeline |
Invesco China Technology |
Franklin FTSE China |
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. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
Franklin FTSE vs. KraneShares CSI China | Franklin FTSE vs. iShares China Large Cap | Franklin FTSE vs. iShares MSCI Taiwan | Franklin FTSE vs. Xtrackers Harvest CSI |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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