Correlation Between Aberdeen Global and Templeton Emerging

Can any of the company-specific risk be diversified away by investing in both Aberdeen Global and Templeton Emerging 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 Global and Templeton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aberdeen Global IF and Templeton Emerging Markets, you can compare the effects of market volatilities on Aberdeen Global and Templeton Emerging 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 Global with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Templeton Emerging.

Diversification Opportunities for Aberdeen Global and Templeton Emerging

-0.09

Correlation Coefficient

Aberdeen Global  Templeton Emerging

Good diversification

The 3 months correlation between Aberdeen and Templeton is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global IF and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Aberdeen Global 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 Global IF are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Templeton Emerging go up and down completely randomly.

Pair Corralation between Aberdeen Global and Templeton Emerging

Considering the 90-day investment horizon Aberdeen Global IF is expected to under-perform the Templeton Emerging. But the stock apears to be less risky and, when comparing its historical volatility, Aberdeen Global IF is 1.3 times less risky than Templeton Emerging. The stock trades about -0.01 of its potential returns per unit of risk. The Templeton Emerging Markets is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,221  in Templeton Emerging Markets on September 19, 2024 and sell it today you would lose (1.00) from holding Templeton Emerging Markets or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aberdeen Global IF  vs.  Templeton Emerging Markets

Aberdeen Global IF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Aberdeen Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Templeton Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable primary indicators, Templeton Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aberdeen Global and Templeton Emerging

The main advantage of trading using opposite Aberdeen Global and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's long position.

The idea behind Aberdeen Global IF and Templeton Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.