Correlation Between Omni Small and Aberdeen Income

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

By analyzing existing cross correlation between Omni Small Cap Value and Aberdeen Income Credit, you can compare the effects of market volatilities on Omni Small and Aberdeen Income 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 Omni Small with a short position of Aberdeen Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small and Aberdeen Income.

Diversification Opportunities for Omni Small and Aberdeen Income

0.62

Correlation Coefficient

Omni Small  Aberdeen Income

Poor diversification

The 3 months correlation between Omni and Aberdeen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit and Omni Small 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 Omni Small Cap Value are associated (or correlated) with Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of Omni Small i.e., Omni Small and Aberdeen Income go up and down completely randomly.

Pair Corralation between Omni Small and Aberdeen Income

Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Aberdeen Income. In addition to that, Omni Small is 1.66 times more volatile than Aberdeen Income Credit. It trades about -0.21 of its total potential returns per unit of risk. Aberdeen Income Credit is currently generating about -0.33 per unit of volatility. If you would invest  643.00  in Aberdeen Income Credit on September 19, 2024 and sell it today you would lose (50.00) from holding Aberdeen Income Credit or give up 7.78% of portfolio value over 90 days.

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

Omni Small Cap Value  vs.  Aberdeen Income Credit

Omni Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Omni Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Omni Small and Aberdeen Income

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

The idea behind Omni Small Cap Value and Aberdeen Income Credit 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 Commodity Directory module to find actively traded commodities issued by global exchanges.