Correlation Between Abrdn Bloomberg and VanEck CMCI

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

By analyzing existing cross correlation between abrdn Bloomberg All and VanEck CMCI Commodity, you can compare the effects of market volatilities on Abrdn Bloomberg and VanEck CMCI 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 Bloomberg with a short position of VanEck CMCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Bloomberg and VanEck CMCI.

Diversification Opportunities for Abrdn Bloomberg and VanEck CMCI

0.74

Correlation Coefficient

Abrdn Bloomberg  VanEck CMCI

Poor diversification

The 3 months correlation between Abrdn and VanEck is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Bloomberg All and VanEck CMCI Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CMCI Commodity and Abrdn Bloomberg 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 Bloomberg All are associated (or correlated) with VanEck CMCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CMCI Commodity has no effect on the direction of Abrdn Bloomberg i.e., Abrdn Bloomberg and VanEck CMCI go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and VanEck CMCI

Considering the 90-day investment horizon abrdn Bloomberg All is expected to generate 0.67 times more return on investment than VanEck CMCI. However, abrdn Bloomberg All is 1.48 times less risky than VanEck CMCI. It trades about 0.18 of its potential returns per unit of risk. VanEck CMCI Commodity is currently generating about 0.08 per unit of risk. If you would invest  1,972  in abrdn Bloomberg All on December 28, 2024 and sell it today you would earn a total of  146.00  from holding abrdn Bloomberg All or generate 7.4% return on investment over 90 days.

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

abrdn Bloomberg All  vs.  VanEck CMCI Commodity

abrdn Bloomberg All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Abrdn Bloomberg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VanEck CMCI Commodity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck CMCI Commodity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, VanEck CMCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Abrdn Bloomberg and VanEck CMCI

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

The idea behind abrdn Bloomberg All and VanEck CMCI Commodity 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 Global Correlations module to find global opportunities by holding instruments from different markets.