Correlation Between Aberdeen Income and Cornerstone Strategic

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

Diversification Opportunities for Aberdeen Income and Cornerstone Strategic

0.81

Correlation Coefficient

Aberdeen Income  Cornerstone Strategic

Very poor diversification

The 3 months correlation between Aberdeen and Cornerstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Cornerstone Strategic go up and down completely randomly.

Pair Corralation between Aberdeen Income and Cornerstone Strategic

Considering the 90-day investment horizon Aberdeen Income is expected to generate 4.28 times less return on investment than Cornerstone Strategic. But when comparing it to its historical volatility, Aberdeen Income Credit is 1.38 times less risky than Cornerstone Strategic. It trades about 0.14 of its potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  746.00  in Cornerstone Strategic Return on September 3, 2024 and sell it today you would earn a total of  184.00  from holding Cornerstone Strategic Return or generate 24.66% return on investment over 90 days.

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

Aberdeen Income Credit  vs.  Cornerstone Strategic Return

Aberdeen Income Credit

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Income Credit are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. 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.

Cornerstone Strategic

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Return are ranked lower than 34 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating basic indicators, Cornerstone Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aberdeen Income and Cornerstone Strategic

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

The idea behind Aberdeen Income Credit and Cornerstone Strategic Return 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..