Correlation Between Barings Global and Aberdeen Global

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

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

Diversification Opportunities for Barings Global and Aberdeen Global

0.61

Correlation Coefficient

Barings Global  Aberdeen Global

Poor diversification

The 3 months correlation between Barings and Aberdeen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Umbrella and Aberdeen Global Asian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Asian and Barings 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 Barings Global Umbrella are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Asian has no effect on the direction of Barings Global i.e., Barings Global and Aberdeen Global go up and down completely randomly.

Pair Corralation between Barings Global and Aberdeen Global

Assuming the 90 days trading horizon Barings Global Umbrella is expected to generate 0.53 times more return on investment than Aberdeen Global. However, Barings Global Umbrella is 1.87 times less risky than Aberdeen Global. It trades about 0.23 of its potential returns per unit of risk. Aberdeen Global Asian is currently generating about 0.06 per unit of risk. If you would invest  701.00  in Barings Global Umbrella on October 1, 2024 and sell it today you would earn a total of  45.00  from holding Barings Global Umbrella or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Barings Global Umbrella  vs.  Aberdeen Global Asian

Barings Global Umbrella

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Umbrella are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unsteady basic indicators, Barings Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aberdeen Global Asian

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Asian are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barings Global and Aberdeen Global

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

The idea behind Barings Global Umbrella and Aberdeen Global Asian 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.