Correlation Between Alpine Ultra and Aberdeen Short

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

By analyzing existing cross correlation between Alpine Ultra Short and Aberdeen Short Duration, you can compare the effects of market volatilities on Alpine Ultra and Aberdeen Short 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 Alpine Ultra with a short position of Aberdeen Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Ultra and Aberdeen Short.

Diversification Opportunities for Alpine Ultra and Aberdeen Short

0.56

Correlation Coefficient

Alpine Ultra  Aberdeen Short

Very weak diversification

The 3 months correlation between Alpine and Aberdeen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Ultra Short and Aberdeen Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Short Duration and Alpine Ultra 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 Alpine Ultra Short are associated (or correlated) with Aberdeen Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Short Duration has no effect on the direction of Alpine Ultra i.e., Alpine Ultra and Aberdeen Short go up and down completely randomly.

Pair Corralation between Alpine Ultra and Aberdeen Short

Assuming the 90 days horizon Alpine Ultra Short is expected to generate 0.33 times more return on investment than Aberdeen Short. However, Alpine Ultra Short is 3.04 times less risky than Aberdeen Short. It trades about 0.22 of its potential returns per unit of risk. Aberdeen Short Duration is currently generating about 0.03 per unit of risk. If you would invest  995.00  in Alpine Ultra Short on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Alpine Ultra Short or generate 0.8% return on investment over 90 days.

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

Alpine Ultra Short  vs.  Aberdeen Short Duration

Alpine Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Ultra Short are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Alpine Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Short Duration

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Short Duration are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Aberdeen Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine Ultra and Aberdeen Short

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

The idea behind Alpine Ultra Short and Aberdeen Short Duration 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.