Correlation Between Aberdeen Standard and BlackRock Utility

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

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

Diversification Opportunities for Aberdeen Standard and BlackRock Utility

0.66

Correlation Coefficient

Aberdeen Standard  BlackRock Utility

Poor diversification

The 3 months correlation between Aberdeen and BlackRock is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Standard Global and BlackRock Utility Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Utility and Aberdeen Standard 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 Standard Global are associated (or correlated) with BlackRock Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Utility has no effect on the direction of Aberdeen Standard i.e., Aberdeen Standard and BlackRock Utility go up and down completely randomly.

Pair Corralation between Aberdeen Standard and BlackRock Utility

Given the investment horizon of 90 days Aberdeen Standard Global is expected to under-perform the BlackRock Utility. In addition to that, Aberdeen Standard is 1.1 times more volatile than BlackRock Utility Infrastructure. It trades about -0.48 of its total potential returns per unit of risk. BlackRock Utility Infrastructure is currently generating about -0.19 per unit of volatility. If you would invest  2,345  in BlackRock Utility Infrastructure on September 24, 2024 and sell it today you would lose (87.00) from holding BlackRock Utility Infrastructure or give up 3.71% of portfolio value over 90 days.

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

Aberdeen Standard Global  vs.  BlackRock Utility Infrastructu

Aberdeen Standard Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Standard Global has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the fund traders.

BlackRock Utility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Utility Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BlackRock Utility is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aberdeen Standard and BlackRock Utility

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

The idea behind Aberdeen Standard Global and BlackRock Utility Infrastructure 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.