Correlation Between Aberdeen Income and Omni Small

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

By analyzing existing cross correlation between Aberdeen Income Credit and Omni Small Cap Value, you can compare the effects of market volatilities on Aberdeen Income and Omni Small 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 Income with a short position of Omni Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Income and Omni Small.

Diversification Opportunities for Aberdeen Income and Omni Small

0.62

Correlation Coefficient

Aberdeen Income  Omni Small

Poor diversification

The 3 months correlation between Aberdeen and Omni is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Omni Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Small Cap and Aberdeen Income 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 Income Credit are associated (or correlated) with Omni Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Small Cap has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Omni Small go up and down completely randomly.

Pair Corralation between Aberdeen Income and Omni Small

Considering the 90-day investment horizon Aberdeen Income Credit is expected to under-perform the Omni Small. But the fund apears to be less risky and, when comparing its historical volatility, Aberdeen Income Credit is 2.04 times less risky than Omni Small. The fund trades about -0.21 of its potential returns per unit of risk. The Omni Small Cap Value is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,986  in Omni Small Cap Value on September 19, 2024 and sell it today you would lose (93.00) from holding Omni Small Cap Value or give up 4.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aberdeen Income Credit  vs.  Omni Small Cap Value

Aberdeen Income Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Income Credit has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Omni Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Omni Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aberdeen Income and Omni Small

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

The idea behind Aberdeen Income Credit and Omni Small Cap Value 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.