Correlation Between Abrdn Emerging and BlackRock

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

By analyzing existing cross correlation between Abrdn Emerging Markets and BlackRock, you can compare the effects of market volatilities on Abrdn Emerging and BlackRock 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 Abrdn Emerging with a short position of BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Emerging and BlackRock.

Diversification Opportunities for Abrdn Emerging and BlackRock

-0.44

Correlation Coefficient

Abrdn Emerging  BlackRock

Very good diversification

The 3 months correlation between Abrdn and BlackRock is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Emerging Markets and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Abrdn Emerging 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 Abrdn Emerging Markets are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Abrdn Emerging i.e., Abrdn Emerging and BlackRock go up and down completely randomly.

Pair Corralation between Abrdn Emerging and BlackRock

Considering the 90-day investment horizon Abrdn Emerging Markets is expected to under-perform the BlackRock. In addition to that, Abrdn Emerging is 1.25 times more volatile than BlackRock. It trades about -0.04 of its total potential returns per unit of risk. BlackRock is currently generating about 0.03 per unit of volatility. If you would invest  100,935  in BlackRock on October 6, 2024 and sell it today you would earn a total of  1,148  from holding BlackRock or generate 1.14% return on investment over 90 days.

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

Abrdn Emerging Markets  vs.  BlackRock

Abrdn Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abrdn Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite latest fragile performance, the Fund's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

BlackRock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Abrdn Emerging and BlackRock

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

The idea behind Abrdn Emerging Markets and BlackRock 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.