Correlation Between Aberdeen Income and Aggressive Investors

Can any of the company-specific risk be diversified away by investing in both Aberdeen Income and Aggressive Investors 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 Aggressive Investors 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 Aggressive Investors 1, you can compare the effects of market volatilities on Aberdeen Income and Aggressive Investors 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 Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Income and Aggressive Investors.

Diversification Opportunities for Aberdeen Income and Aggressive Investors

0.25

Correlation Coefficient

Aberdeen Income  Aggressive Investors

Modest diversification

The 3 months correlation between Aberdeen and Aggressive is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors 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 Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Aggressive Investors go up and down completely randomly.

Pair Corralation between Aberdeen Income and Aggressive Investors

Considering the 90-day investment horizon Aberdeen Income Credit is expected to under-perform the Aggressive Investors. In addition to that, Aberdeen Income is 1.34 times more volatile than Aggressive Investors 1. It trades about -0.33 of its total potential returns per unit of risk. Aggressive Investors 1 is currently generating about -0.05 per unit of volatility. If you would invest  10,106  in Aggressive Investors 1 on September 19, 2024 and sell it today you would lose (104.00) from holding Aggressive Investors 1 or give up 1.03% of portfolio value over 90 days.

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

Aberdeen Income Credit  vs.  Aggressive Investors 1

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.

Aggressive Investors

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Investors 1 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Aggressive Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aberdeen Income and Aggressive Investors

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

The idea behind Aberdeen Income Credit and Aggressive Investors 1 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.