Correlation Between Aberdeen Income and Elfun Trusts

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

Diversification Opportunities for Aberdeen Income and Elfun Trusts

0.02

Correlation Coefficient

Aberdeen Income  Elfun Trusts

Significant diversification

The 3 months correlation between Aberdeen and Elfun is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Elfun Trusts Elfun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Trusts Elfun 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 Elfun Trusts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Trusts Elfun has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Elfun Trusts go up and down completely randomly.

Pair Corralation between Aberdeen Income and Elfun Trusts

Considering the 90-day investment horizon Aberdeen Income Credit is expected to under-perform the Elfun Trusts. In addition to that, Aberdeen Income is 1.3 times more volatile than Elfun Trusts Elfun. It trades about -0.21 of its total potential returns per unit of risk. Elfun Trusts Elfun is currently generating about 0.09 per unit of volatility. If you would invest  9,720  in Elfun Trusts Elfun on September 19, 2024 and sell it today you would earn a total of  267.00  from holding Elfun Trusts Elfun or generate 2.75% return on investment over 90 days.

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

Aberdeen Income Credit  vs.  Elfun Trusts Elfun

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.

Elfun Trusts Elfun

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Elfun Trusts 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 Elfun Trusts

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

The idea behind Aberdeen Income Credit and Elfun Trusts Elfun 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.